As filed with the Securities and Exchange Commission on August 28, 2000
Registration Nos. 33-6931
811-4727
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 41 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 42 |X|
(Check appropriate box or boxes)
-------------------
Phoenix Strategic Equity Series Fund
(Exact Name of Registrant as Specified in Charter)
-------------------
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices) (Zip Code)
c/o Phoenix Equity Planning--Shareholder Services
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
----------------------
Pamela S. Sinofsky
Assistant Vice President
and Assistant Counsel
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0479
(name and address of Agent for Service)
---------------------
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on August 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Phoenix Strategic Equity Series Fund, a Delaware business trust (the
"Registrant") is the successor issuer to Phoenix Strategic Equity Series Fund,
a Massachusetts business trust (the "Predecessor"). This Post-Effective
Amendment has been filed for the purpose of adopting under the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940
the Registration Statement on Form N-1A (nos 33-6931 and 811-4727) of the
Predecessor pursuant to the provisions of Rule 414 under the Securities Act of
1933. In accordance with the provisions of paragraph (d) of Rule 414, this
Registration Statement also revises and sets forth additional information
arising in connection with Registrant's change of domicile.
================================================================================
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
UNDER THE SECURITIES ACT OF 1993
PART A
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
<S> <C>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
----------------------------- ------------------
1. Front and Back Cover Pages................................ Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance...... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table............................ Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks....................................... Investment Risk and Return Summary
5. Management's Discussion of Fund Performance............... Performance Tables
6. Management, Organization, and Capital Structure........... Management of the Fund
7. Shareholder Information................................... Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things to Know When Selling Shares; Account
Policies; Investor Services; Tax Status of Distributions
8. Distribution Arrangements................................. Sales Charges
9. Financial Highlights Information.......................... Financial Highlights
</TABLE>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
----------------------------- -------------------------------------------
<S> <C>
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund................................... Management of the Fund
14. Control Persons and Principal Holders of Securities...... Management of the Fund
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
</TABLE>
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH UNDER THE
APPROPRIATE ITEM, SO NUMBERED, IN PART C OF THIS REGISTRATION STATEMENT.
<PAGE>
Phoenix Investment Partners
Prospectus
August 28, 2000
-------- Engemann
Phoenix-Engemann
Small Cap Fund
-------- Seneca
Phoenix-Seneca
Growth Fund
Phoenix-Seneca
Strategic Theme Fund
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This prospectus contains important
information that you should know before
investing in the Phoenix-Engemann
Small Cap Fund, the Phoenix-Seneca
Growth Fund and the Phoenix-Seneca
Strategic Theme Fund. Please read it
carefully and keep for future reference.
[logo] PHOENIX
INVESTMENT PARTNERS
<PAGE>
TABLE OF CONTENTS
-------------------------------------------------------------------------
Phoenix-Engemann Small Cap Fund
Investment Risk and Return Summary.............................. 1
Fund Expenses................................................... 4
Management of the Fund.......................................... 5
Phoenix-Seneca Growth Fund
Investment Risk and Return Summary.............................. 7
Fund Expenses................................................... 10
Management of the Fund.......................................... 11
Phoenix-Seneca Strategic Theme Fund
Investment Risk and Return Summary.............................. 13
Fund Expenses................................................... 16
Management of the Fund.......................................... 17
Additional Investment Techniques................................... 19
Pricing of Fund Shares............................................. 20
Sales Charges...................................................... 21
Your Account....................................................... 23
How to Buy Shares.................................................. 25
How to Sell Shares................................................. 25
Things You Should Know When Selling Shares......................... 26
Account Policies................................................... 27
Investor Services.................................................. 28
Tax Status of Distributions........................................ 29
Financial Highlights............................................... 30
Additional Information............................................. 37
[triangle] Phoenix
Strategic
Equity
Series
Fund
<PAGE>
Phoenix-Engemann Small Cap Fund
Investment Risk and Return Summary
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Small Cap Fund has an investment objective of long-term capital
growth. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, at least 65% of the fund's total assets
will be invested in stocks of companies with total market
capitalizations of $1.5 billion or less at the time of investment. The
fund may invest in both U.S. and foreign (non-U.S.) issuers.
[arrow] The subadviser selects companies that it believes have the potential
for long-term, rapid growth. Companies are selected on the basis of
their:
o ability to expand existing product lines, introduce new products and
expand geographically,
o market share gains,
o improved operating efficiency, and
o unexploited themes or acquisitions.
Additionally, the fund seeks companies with strong financial structures
and strong fundamental prospects.
[arrow] Any income derived from investments will be incidental.
[arrow] Securities are evaluated for sale when they fail to meet the
subadviser's expectations.
[arrow] The subadviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may increase
costs to the fund, may negatively affect fund performance, and may
increase capital gains distributions, resulting in greater tax
liability to you.
Temporary Defensive Strategy: When, in the subadviser's opinion, adverse market
or economic conditions warrant, any part of the fund's assets may be held in
cash or money market instruments, including U.S. Treasury obligations maturing
within one year from the date of purchase. In such instances, the fund may not
achieve its stated objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
Phoenix-Engemann Small Cap Fund 1
<PAGE>
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
SMALL CAPITALIZATIONS
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance and can make investment returns highly
volatile. Product lines are often less diversified and subject to competitive
threats. Smaller capitalization stocks are subject to varying patterns of
trading volume and may, at times, be difficult to sell.
2 Phoenix-Engemann Small Cap Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Small Cap Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year.(1) The table shows how the
fund's average annual returns for one year and for the life of the fund compare
to those of a broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
Calendar Year Annual Return (%)
1996 29.96
1997 9.51
1998 11.40
1999 83.61
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 71.44% (quarter ending December 31,
1999) and the lowest return for a quarter was (26.01)% (quarter ending September
30, 1998). Year-to-date performance (through June 30, 2000) is 10.29%.
--------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Life of the Fund(2)
--------------------------------------------------------------------------------
Class A Shares 73.05% 36.07%
--------------------------------------------------------------------------------
Class B Shares 78.32% 36.81%
--------------------------------------------------------------------------------
Russell 2000 Growth Index (3) 43.09% 16.74%
--------------------------------------------------------------------------------
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Since October 16, 1995.
(3) The Russell 2000 Growth Index is an unmanaged, commonly used measure of
total return performance of small-capitalization growth-orientated stocks. The
Index does not reflect sales charges.
Phoenix-Engemann Small Cap Fund 3
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------- -------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.75% None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None
Redemption Fee None None
Exchange Fee None None
----------------------------------------------------
CLASS A CLASS B
SHARES SHARES
------- -------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75%
Distribution and Service (12b-1) Fees (b) 0.25% 1.00%
Other Expenses 0.38% 0.38%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.38% 2.13%
===== =====
</TABLE>
-------------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
4 Phoenix-Engemann Small Cap Fund
<PAGE>
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $707 $987 $1,287 $2,137
--------------------------------------------------------------------------------
Class B $616 $867 $1,144 $2,271
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $216 $667 $1,144 $2,271
--------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------
THE ADVISERS
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix acts as
the investment adviser for 14 fund companies totaling 37 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of December 31, 1999, Phoenix had $25.7 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Roger Engemann & Associates, Inc. ("Engemann") is the investment subadviser to
the fund and is located at 600 North Rosemead Boulevard, Pasadena, California
91107. Engemann acts as adviser to five mutual funds, as subadviser to four
other mutual funds and acts as investment adviser to institutions and
individuals. As of December 31, 1999, Engemann had $10.9 billion in assets under
management. Engemann has been an investment adviser since 1969.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
funds. Engemann, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Engemann manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
$1+ billion
1st billion through $2 billion $2+ billion
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
----------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Engemann Small Cap Fund 5
<PAGE>
Phoenix pays Engemann a subadvisory fee at the following rates:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Up to $323 million $1+ billion
$323 million through $1 billion through $2 billion $2+ billion
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subadvisory Fee 0.20% 0.375% 0.35% 0.325%
------------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$2,089,096. The ratio of management fees to average net assets for the fiscal
year ended April 30, 2000 was 0.75%.
PORTFOLIO MANAGEMENT
Roger Engemann, Jim Mair and John Tilson oversee the research and portfolio
management function at Engemann. Each is a Managing Director, Equities of
Phoenix. The portfolio managers named below are responsible for the day-to-day
management of the fund's portfolio. Mr. Engemann has been President of Engemann
since its inception. Messrs. Mair and Tilson are both Executive Vice Presidents
of Portfolio Management of Engemann and both have been with Engemann since 1983.
Messrs. Engemann and Mair earned the right to use the Chartered Financial
Analyst designation in 1972, and Mr. Tilson earned the right to use the
Chartered Financial Analyst designation in 1974.
Lou Abel and Yossi Lipsker serve as co-portfolio managers of the fund and as
such are responsible for the day-to-day management of the fund's portfolio.
Messrs. Abel and Lipsker are both Vice Presidents of Engemann and have been with
Engemann since 1991 and 1995, respectively. Messrs. Abel and Lipsker also serve
as co-portfolio managers of the Phoenix-Engemann Small & Mid-Cap Growth Fund of
the Phoenix-Engemann Funds, and Mr. Lipsker serves as co-portfolio manager of
the Phoenix-Engemann Nifty Fifty Fund of the Phoenix-Engemann Funds. Mr. Abel
earned the right to use the Chartered Financial Analyst designation in 1993.
6 Phoenix-Engemann Small Cap Fund
<PAGE>
PHOENIX-SENECA GROWTH FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Seneca Growth Fund has an investment objective of long-term capital
growth. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, the fund will invest at least 65% of its
total assets in stocks of any capitalization.
[arrow] The subadviser uses a screening process to select stocks of companies
that it believes are:
o growing earnings at accelerated rates;
o producing quality, sustainable earnings;
o reasonably valued relative to their growth rate and to the market;
o well managed;
o have potential to exceed earnings expectations (so called "earnings
surprisers").
[arrow] Stocks are reviewed for sale if:
o earnings reports disappoint;
o valuation levels reach the top of their historic levels; or
o earnings momentum peaks.
[arrow] The fund may invest in both U.S. and foreign (non-U.S.) stocks of any
type, with any capitalization and from any industry.
[arrow] Any income derived from investments will be incidental.
[arrow] The subadviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may increase
costs to the fund, may negatively affect fund performance, and may
increase capital gains distributions, resulting in greater tax
liability to you.
Temporary Defensive Strategy: When, in the subadviser's opinion, adverse market
or economic conditions warrant, any part of the fund's assets may be held in
cash or money market instruments, including U.S. Treasury obligations maturing
within one year from the date of purchase. In such instances, the fund may not
achieve its stated objective.
Phoenix-Seneca Growth Fund 7
<PAGE>
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
SMALL AND MEDIUM CAPITALIZATIONS
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small and medium
capitalization companies and their stock performance and can make investment
returns highly volatile. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks are subject to varying
patterns of trading volume and may, at times, be difficult to sell.
8 Phoenix-Seneca Growth Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Seneca Growth Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year.(1) The table shows how the fund's
average annual returns compare to those of a broad-based securities market
index. The fund's past performance is not necessarily an indication of how the
fund will perform in the future.
[GRAPHIC OMITTED]
Calendar Year Annual Return (%)
1997 27.87
1998 28.80
1999 38.91
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 27.55% (quarter ending December 31,
1999) and the lowest return for a quarter was (12.03)% (quarter ending September
30, 1998). Year-to-date performance (through June 30, 2000) is 2.51%.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns Life of the Fund(2)
(for the periods ending 12/31/99)(1)
-----------------------------------------------------------------------------------------------------------------
One Year Class A Class B Class C Class X
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 30.92% 32.78% -- -- --
-----------------------------------------------------------------------------------------------------------------
Class B Shares 33.28% -- 24.81% -- --
-----------------------------------------------------------------------------------------------------------------
Class C Shares 37.20% -- -- 27.09% --
-----------------------------------------------------------------------------------------------------------------
Class X Shares 39.26% -- -- -- 35.66%
-----------------------------------------------------------------------------------------------------------------
S&P 500 Composite Stock Price Index(3) 21.14% 26.86% 19.57% 19.57% 26.86%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class X and Class A Shares since March 8, 1996; Class B and Class C Shares
since July 1, 1998.
(3) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's performance does not
reflect sales charges.
Phoenix-Seneca Growth Fund 9
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS X
SHARES SHARES SHARES SHARES
------- ------- ------- -------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
<S> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.75% None None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b) None
Maximum Sales Charge (load) Imposed on Reinvested None None None
Dividends None
Redemption Fee None None None None
Exchange Fee None None None None
--------------------------------------------------------
CLASS A CLASS B CLASS C CLASS X
SHARES SHARES SHARES SHARES
------- ------- ------- -------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.70% 0.70% 0.70% 0.70%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00% None
Other Expenses 0.28% 0.28% 0.28% 0.28%
----- ----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.23% 1.98% 1.98%(c) 0.98%(c)
===== ===== ===== =====
</TABLE>
----------------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) For purposes of this table, expenses of the former Phoenix-Seneca Equity
Opportunities Fund as of April 30, 2000, were used to estimate Total Annual Fund
Operating Expenses; actual expenses may be more or less than the amounts shown.
Effective May 12, 2000, the former Phoenix-Seneca Equity Opportunities Fund has
merged with the former Phoenix-Seneca Growth Fund, and is now called
Phoenix-Seneca Growth Fund.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
10 Phoenix-Seneca Growth Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $693 $943 $1,212 $1,978
-------------------------------------------------------------------------------------------------------------
Class B $601 $821 $1,068 $2,113
-------------------------------------------------------------------------------------------------------------
Class C $301 $621 $1,068 $2,306
-------------------------------------------------------------------------------------------------------------
Class X $100 $312 $542 $1,201
-----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B $201 $621 $1,068 $2,113
-------------------------------------------------------------------------------------------------------------
Class C $201 $621 $1,068 $2,306
-----------------------------------------------------------------------------------------------------------------
</TABLE>
MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------
THE ADVISERS
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix acts as
the investment adviser for 14 fund companies totaling 37 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of December 31, 1999, Phoenix had $25.7 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
fund and is located at 909 Montgomery Street, San Francisco, California 94133.
Seneca acts as a subadviser to nine other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1999, Seneca had $9.2
billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
fund. Seneca, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Seneca manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates:
Phoenix-Seneca Growth Fund 11
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
$1st billion $1+ billion through $2 billion $2+ billion
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.70% 0.65% 0.60%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix pays Seneca a subadvisory fee at the following rates:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Up to $184 million $1+ billion
$184 million through $1 billion through $2 billion $2+ billion
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subadvisory Fee 0.20% 0.35% 0.325% 0.30%
------------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$1,581,392. The ratio of management fees to average net assets for the fiscal
year ended April 30, 2000 was 0.70%.
PORTFOLIO MANAGEMENT
Investment and trading decisions for the fund are made by a team of managers and
analysts headed by Gail P. Seneca. The team leaders, which include Ms. Seneca,
Richard D. Little and Ronald K. Jacks, are primarily responsible for the
day-to-day decisions related to the fund.
Gail P. Seneca. Ms. Seneca has served as Co-Manager of the fund since January
1998. She also serves as Co-Manager of the Phoenix-Seneca Strategic Theme Fund
of Phoenix Strategic Equity Series Fund and of the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Ms. Seneca also serves as a team leader for each of the
Phoenix-Seneca Funds. Ms. Seneca has been the Chief Executive and Investment
Officer of Seneca or GMG/Seneca since November 1989. From October 1987 until
October 1989, she was Senior Vice President of the Asset Management Division of
Wells Fargo Bank, and, from October 1983 to September 1987, she was Investment
Strategist and Portfolio Manager for Chase Lincoln Bank, heading the fixed
income division.
Richard D. Little. Mr. Little has served as Co-Manager of the fund since January
1998. He also serves as Co-Manager of the Phoenix-Seneca Strategic Theme Fund of
Phoenix Strategic Equity Series Fund and of the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Mr. Little also serves as a Portfolio Manager for Phoenix-Seneca
Mid-Cap "EDGE"SM Fund of Phoenix-Seneca Funds. Mr. Little has been Director of
Equities with Seneca or GMG/Seneca since December 1989. Before he joined
GMG/Seneca, Mr. Little held positions as an analyst, board member, and regional
manager with Smith Barney, NatWest Securities, and Montgomery Securities.
Ronald K. Jacks. Mr. Jacks has served as Co-Manager of the fund since January
1998. He also serves as Co-Manager of the Phoenix-Seneca Strategic Theme Fund of
Phoenix Strategic Equity Series Fund and of the Phoenix Duff & Phelps
Institutional Growth Stock Portfolio of Phoenix Duff & Phelps Institutional
Mutual Funds. Mr. Jacks also serves as a Portfolio Manager for Phoenix-Seneca
Mid-Cap "EDGE" SM Fund of Phoenix-Seneca Funds. Mr. Jacks was Secretary of the
Phoenix-Seneca Funds from February 1996 through February 1998. Mr. Jacks was a
Trustee of Phoenix-Seneca Funds from February 1996 through June 1997. Mr. Jacks
has been a Portfolio Manager with Seneca or GMG/Seneca since July 1990.
12 Phoenix-Seneca Growth Fund
<PAGE>
PHOENIX-SENECA STRATEGIC THEME FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Seneca Strategic Theme Fund has an investment objective of long-term
capital growth. There is no guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund invests primarily in stocks of U.S. and foreign (non-U.S.)
companies of any capitalization that the subadviser believes are well
positioned to benefit from cultural, demographic, regulatory, social,
or technological changes worldwide and that offer growth potential.
[arrow] The subadviser establishes strategic (major changes affecting markets
for prolonged periods) and tactical (focused, short-term) investment
themes that generally reflect trends that appear likely to drive stocks
with:
o similar technologies and products;
o embody social, economic, political and technological considerations;
or
o present a visionary idea or creative solution.
The themes should offer substantial appreciation potential and exhibit
some independence from economic cycles.
[arrow] The subadviser seeks to identify companies which are well positioned to
benefit from an investment theme and possess:
o growing earnings at accelerated rates;
o producing quality, sustainable earnings; and
o reasonably valued relative to their growth rate to the market.
[arrow] More than one theme may be pursued at a time and themes may change when
the subadviser believes that the theme is saturated or fully exploited.
[arrow] The subadviser's investment strategy may result in a higher portfolio
turnover rate for the fund. High portfolio turnover rates may increase
costs to the fund, may negatively affect fund performance, and may
increase capital gains distributions, resulting in greater tax
liability to you.
Temporary Defensive Strategy: When, in the subadviser's opinion, adverse market
conditions warrant, investments may be made in fixed income securities with or
without warrants or
Phoenix-Seneca Strategic Theme Fund 13
<PAGE>
conversion features. The fund may also pursue a policy of retaining cash or
investing all or part of its assets in cash equivalents. In such instances, the
fund may not achieve its stated objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
FOREIGN INVESTING
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
SMALL CAPITALIZATIONS
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance and can make investment returns highly
volatile. Product lines are often less diversified and subject to competitive
threats. Smaller capitalization stocks are subject to varying patterns of
trading volume and may, at times, be difficult to sell.
THEME INVESTING
Theme investing is dependent upon the subadviser's ability to anticipate
emerging market trends, exploit such investment opportunities and to thereafter
sell securities once the theme is saturated.
There is no assurance that the themes selected will increase as the market
increases.
14 Phoenix-Seneca Strategic Theme Fund
<PAGE>
If a limited number of themes are selected for fund investment, adverse
economic, political or regulatory developments may have a greater adverse effect
on the fund than if the fund invested in a larger number of themes.
Themes not selected for investment may prove more profitable than themes
selected for investment by the subadviser.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Seneca Strategic Theme Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year.(1) The table shows how the
fund's average annual returns for one year and for the life of the fund compare
to those of a broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
Calendar Year Annual Return (%)
1996 15.19
1997 17.05
1998 44.52
1999 52.15
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 37.17% (quarter ending December 31,
1998) and the lowest return for a quarter was (7.68)% (quarter ending September
30, 1998). Year-to-date performance (through June 30, 2000) is (5.38)%.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns Life of the Fund(2)
(for the periods ending 12/31/99)(1)
-----------------------------------------------------------------------------------------------------------------
One Year Class A Class B Class C
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 43.41% 30.46% -- --
-----------------------------------------------------------------------------------------------------------------
Class B Shares 47.02% -- 31.14% --
-----------------------------------------------------------------------------------------------------------------
Class C Shares 50.92% -- -- 41.22%
-----------------------------------------------------------------------------------------------------------------
S&P 500 Composite Stock Price Index(3) 21.14% 26.83% 26.83% 24.91%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A and Class B Shares since October 16, 1995, Class C Shares since
November 3, 1997.
(3) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P 500's performance does
not reflect sales charges.
Phoenix-Seneca Strategic Theme Fund 15
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
<S> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.75% None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
-------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses 0.29% 0.29% 0.29%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.29% 2.04% 2.04%
===== ===== =====
</TABLE>
-----------------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
16 Phoenix-Seneca Strategic Theme Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $699 $960 $1,242 $2,042
-------------------------------------------------------------------------------------------------------------
Class B $607 $840 $1,098 $2,176
-------------------------------------------------------------------------------------------------------------
Class C $307 $640 $1,098 $2,369
-----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B $207 $640 $1,098 $2,176
-------------------------------------------------------------------------------------------------------------
Class C $207 $640 $1,098 $2,369
-----------------------------------------------------------------------------------------------------------------
</TABLE>
MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------
THE ADVISERS
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment adviser to the
fund and is located at 56 Prospect Street, Hartford, CT 06115. Phoenix acts as
the investment adviser for 14 fund companies totaling 37 mutual funds, as
subadviser to two fund companies totaling three mutual funds and as adviser to
institutional clients. As of December 31, 1999, Phoenix had $25.7 billion in
assets under management. Phoenix has acted as an investment adviser for over
sixty years.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
fund and is located at 909 Montgomery Street, San Francisco, California 94133.
Seneca acts as a subadviser to nine other mutual funds and as investment adviser
to institutions and individuals. As of December 31, 1999, Seneca had $9.2
billion in assets under management. Seneca has been (with its predecessor,
GMG/Seneca Capital Management LP ("GMG/Seneca")) an investment adviser since
1989.
Subject to the direction of the fund's Board of Trustees, Phoenix is responsible
for managing the fund's investment program and the general operations of the
fund. Seneca, as subadviser, is responsible for day-to-day management of the
fund's portfolio. Seneca manages the fund's assets to conform with the
investment policies as described in this prospectus. The fund pays Phoenix a
monthly investment management fee that is accrued daily against the value of the
fund's net assets at the following rates:
Phoenix-Seneca Strategic Theme Fund 17
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
$1st billion $1+ billion through $2 billion $2+ billion
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee 0.75% 0.70% 0.65%
---------------------------------------------------------------------------------------------
</TABLE>
Phoenix pays Seneca a subadvisory fee at the following rates:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Up to $201 million $1+ billion $2+ billion
$201 million to $1 billion through $2 billion
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subadvisory Fee 0.10% 0.375% 0.350% 0.325%
------------------------------------------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of
$2,319,786. The ratio of management fees to average net assets for the fiscal
year ended April 30, 2000 was 0.75%.
PORTFOLIO MANAGEMENT
Investment and trading decisions for the fund are made by a team of managers and
analysts headed by Gail P. Seneca. The team leaders, which include Ms. Seneca,
Richard D. Little and Ronald K. Jacks, are primarily responsible for the
day-to-day decisions related to the fund.
Gail P. Seneca. Ms. Seneca has served as Co-Manager of the fund since April
1999. She also serves as Co-Manager of the Phoenix-Seneca Growth Fund of Phoenix
Strategic Equity Series Fund and of the Phoenix Duff & Phelps Institutional
Growth Stock Portfolio of Phoenix Duff & Phelps Institutional Mutual Funds. Ms.
Seneca also serves as a team leader for each of the Phoenix-Seneca Funds. Ms.
Seneca has been the Chief Executive and Investment Officer of Seneca or
GMG/Seneca since November 1989. From October 1987 until October 1989, she was
Senior Vice President of the Asset Management Division of Wells Fargo Bank, and,
from October 1983 to September 1987, she was Investment Strategist and Portfolio
Manager for Chase Lincoln Bank, heading the fixed income division.
Richard D. Little. Mr. Little has served as Co-Manager of the fund since April
1999. He also serves as Co-Manager of the Phoenix-Seneca Growth Fund of Phoenix
Strategic Equity Series Fund and of the Phoenix Duff & Phelps Institutional
Growth Stock Portfolio of Phoenix Duff & Phelps Institutional Mutual Funds. Mr.
Little also serves as a Portfolio Manager for Phoenix-Seneca Mid-Cap "EDGE"SM
Fund of Phoenix-Seneca Funds. Mr. Little has been Director of Equities with
Seneca or GMG/Seneca since December 1989. Before he joined GMG/Seneca, Mr.
Little held positions as an analyst, board member, and regional manager with
Smith Barney, NatWest Securities, and Montgomery Securities.
Ronald K. Jacks. Mr. Jacks has served as Co-Manager of the fund since April
1999. He also serves as Co-Manager of the Phoenix-Seneca Growth Fund of Phoenix
Strategic Equity Series Fund and of the Phoenix Duff & Phelps Institutional
Growth Stock Portfolio of Phoenix Duff & Phelps Institutional Mutual Funds. Mr.
Jacks also serves as a Portfolio Manager for Phoenix-Seneca Mid-Cap "EDGE" SM
Fund of Phoenix-Seneca Funds. Mr. Jacks was Secretary of the Phoenix-Seneca
Funds from February 1996 through February 1998. Mr. Jacks was a Trustee of
Phoenix-Seneca Funds from February 1996 through June 1997. Mr. Jacks has been a
Portfolio Manager with Seneca or GMG/Seneca since July 1990.
18 Phoenix-Seneca Strategic Theme Fund
<PAGE>
ADDITIONAL INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------
In addition to the Principal Investment Strategies and Principal Risks, the
funds may engage in the following investment techniques:
CONVERTIBLE SECURITIES
Each of the funds may invest in convertible securities. Convertible securities
have several unique investment characteristics, such as:
o Higher yields than common stocks but lower yields than comparable
nonconvertible securities;
o Typically less fluctuation in value than the "underlying" common
stock, that is, the common stock that the investor receives if he
converts; and
o The potential for capital appreciation if the market price of the
underlying common stock increases.
DERIVATIVES
The funds may write exchange traded, covered call options and purchase put and
call options on securities and securities indices, and may enter into futures
contracts and related options. Up to 100% of the value of the total assets of a
fund may be subject to written call options. The funds may also enter into swap
agreements relating to interest rates and securities indices. The funds may use
derivatives to hedge against changes in interest rates, foreign currency
exchange rates, changes in securities prices or other factors affecting the
value of fund investments, or as part of the fund's overall investment
technique. If the adviser fails to correctly predict interest rate, currency or
price movements, the fund can lose money. Derivatives transactions may be less
liquid than other securities and the counterparty to such transaction may not
perform as expected. In addition, purchasing call or put options involves the
risk that the fund may lose the premium it paid plus transaction costs. Futures
and options involve market risk in excess of their value and may not be as
liquid as other securities.
The funds may also invest in mortgage-backed and asset-backed securities. Early
payoffs on the underlying loans in mortgage-backed and asset-backed securities
may result in the fund receiving less income than originally anticipated. The
variability in prepayments will tend to limit price gains when interest rates
drop and exaggerate price declines when interest rates rise. In the event of
high prepayments, the fund may be required to invest proceeds at lower interest
rates, causing the fund to earn less than if the prepayments had not occurred.
FOREIGN INVESTING
The funds may invest in securities of foreign (non-U.S.) issuers. Foreign
markets and currencies may not perform as well as U.S. markets and dividends and
other income payable on foreign securities may be subject to foreign taxes.
Phoenix Strategic Equity Series Fund 19
<PAGE>
REPURCHASE AGREEMENTS
The funds may invest in repurchase agreements. Default or insolvency of the
other party presents risks to the funds.
SECURITIES LENDING
The funds may loan portfolio securities to increase investment returns. If the
borrower is unwilling or unable to return the borrowed securities when due, the
funds can suffer losses.
The fund may buy other types of securities or employ other portfolio management
techniques. Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques of the fund.
PRICING OF FUND SHARES
--------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, each fund calculates net asset value by:
o adding the values of all securities and other assets of the fund,
o subtracting liabilities, and
o dividing the result by the total number of outstanding shares of the
fund.
Asset Value: The funds' investments are valued at market value. If market
quotations are not available, the funds determine a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class' net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
20 Phoenix Strategic Equity Series Fund
<PAGE>
The net asset value per share of each class of each fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). A fund will not calculate its
net asset values per share on days when the NYSE is closed for trading. If a
fund holds securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares, the net
asset value of the fund's shares may change on days when shareholders will not
be able to purchase or redeem the fund's shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the fund's net asset value is calculated following the dividend record date.
SALES CHARGES
--------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
Presently, two classes of shares are offered of the Small Cap Fund, three
classes of shares are offered of the Strategic Theme Fund and four classes of
shares are offered of the Growth Fund. Each class of shares has different sales
and distribution charges (see "Fund Expenses" previously in this prospectus).
For certain classes of shares, the funds have adopted distribution and service
plans allowed under Rule 12b-1 of the Investment Company Act of 1940 that
authorize the funds to pay distribution and service fees for the sale of their
shares and for services provided to shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of a fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Phoenix Strategic Equity Series Fund 21
<PAGE>
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 5.75% of the offering price (6.10% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than Class B and Class C Shares.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first five
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and Class C
Shares" below. This charge declines to 0% over a period of five years and may be
waived under certain conditions. Class B Shares have higher distribution and
service fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares
automatically convert to Class A Shares eight years after purchase. Purchase of
Class B Shares may be inappropriate for any investor who may qualify for reduced
sales charges of Class A Shares and anyone who is over 85 years of age. The
underwriter may decline purchases in such situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1%. See "Deferred Sales
Charge Alternative--Class B and Class C Shares" below. Class C Shares have the
same distribution and service fees (1.00%) and pay comparable dividends as Class
B Shares. Class C Shares do not convert to any other class of shares of the
fund.
CLASS X SHARES. Class X Shares are offered primarily to institutional investors
such as pension and profit sharing plans, other employee benefit trusts,
investment advisers, endowments, foundations and corporations. If you are
eligible to purchase and do purchase Class X Shares, you will pay no sales
charge at any time. There are no distribution and services fees applicable to
Class X Shares. For additional information about purchasing Class X Shares,
please contact Customer Service by calling (800) 243-1574.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the funds' underwriter (Phoenix Equity Planning Corporation or "PEPCO").
22 Phoenix Strategic Equity Series Fund
<PAGE>
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS
A PERCENTAGE OF
-----------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Under $50,000 5.75% 6.10%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND CLASS C SHARES
Class B and Class C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the rates listed below. The sales
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be imposed
on increases in net asset value or on shares purchased through the reinvestment
of income dividends or capital gains distributions. To minimize the sales
charge, shares not subject to any charge will be redeemed first, followed by
shares held the longest time. To calculate the amount of shares owned and time
period held, all Class B Shares purchased in any month are considered purchased
on the last day of the preceding month, and all Class C Shares are considered
purchased on the trade date.
<TABLE>
<CAPTION>
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
<S> <C> <C> <C> <C> <C> <C>
YEAR 1 2 3 4 5 6+
--------------------------------------------------------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS C SHARES
(GROWTH FUND AND STRATEGIC THEME FUND ONLY)
YEAR 1 2+
--------------------------------------------------------------------------------
CDSC 1% 0%
YOUR ACCOUNT
--------------------------------------------------------------------------------
OPENING AN ACCOUNT
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below. These procedures do not apply to
purchases of Class X Shares.
Phoenix Strategic Equity Series Fund 23
<PAGE>
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
o $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
o $500 for all other accounts.
Minimum ADDITIONAL investments:
o $25 for any account.
o There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
The funds reserve the right to refuse a purchase order for any reason.
STEP 2.
Your second choice will be what class of shares to buy. The funds offer up to
three classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
o Receive both dividends and capital gain distributions in additional
shares;
o Receive dividends in additional shares and capital gain distributions
in cash;
o Receive dividends in cash and capital gain distributions in
additional shares; or
o Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
24 Phoenix Strategic Equity Series Fund
<PAGE>
HOW TO BUY SHARES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------- ----------------------------------------------------------------------------
TO OPEN AN ACCOUNT
(CLASS A, CLASS B AND CLASS C SHARES ONLY)
----------------------------------- ----------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor.
Some advisors may charge a fee and may set different minimum investments or
limitations on buying shares.
----------------------------------- ----------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
----------------------------------- ----------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
----------------------------------- ----------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable to the
fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
----------------------------------- ----------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
----------------------------------- ----------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
----------------------------------- ----------------------------------------------------------------------------
</TABLE>
HOW TO SELL SHARES
--------------------------------------------------------------------------------
You have the right to have the funds buy back shares at the net asset value next
determined after receipt of a redemption order by the funds' Transfer Agent or
an authorized agent. In the case of a Class B or Class C Share redemption, you
will be subject to the applicable deferred sales charge, if any, for such
shares. Subject to certain restrictions, shares may be redeemed by telephone or
in writing. In addition, shares may be sold through securities dealers, brokers
or agents who may charge customary commissions or fees for their services. The
funds do not charge any redemption fees. Payment for shares redeemed is made
within seven days; however, redemption proceeds will not be disbursed until each
check used for purchases of shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the check.
Phoenix Strategic Equity Series Fund 25
<PAGE>
<TABLE>
<CAPTION>
------------------------------------ -----------------------------------------------------------------------------
TO SELL SHARES
(CLASS A, CLASS B AND CLASS C SHARES ONLY)
------------------------------------ -----------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor.
Some advisors may charge a fee and may set different minimums on redemptions
of accounts.
------------------------------------ -----------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and account
number, and number of shares or dollar value you wish to sell.
------------------------------------ -----------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184. Be sure to include the registered
owner's name, fund and account number, and number of shares or dollar value
you wish to sell.
------------------------------------ -----------------------------------------------------------------------------
By telephone For sales up to $50,000, requests can be made by calling (800)243-1574.
------------------------------------ -----------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
------------------------------------ -----------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
--------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the funds. Each fund reserves the right to pay large
redemptions "in-kind" (in securities owned by the fund rather than in cash).
Large redemptions are those over $250,000 or 1% of the fund's net assets.
Additional documentation will be required for redemptions by organizations,
fiduciaries, or retirement plans, or if redemption is requested by anyone but
the shareholder(s) of record. Transfers between broker-dealer "street" accounts
are governed by the accepting broker-dealer. Questions regarding this type of
transfer should be directed to your financial advisor. Redemption requests will
not be honored until all required documents in proper form have been received.
To avoid delay in redemption or transfer, shareholders having questions about
specific requirements should contact the funds' Transfer Agent at (800)
243-1574.
REDEMPTIONS BY MAIL
[arrow] If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on
record.
26 Phoenix Strategic Equity Series Fund
<PAGE>
Send a clear letter of instructions with a signature guarantee when any
of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within the last 60
days.
o You want the proceeds to go to a different name or address than on
the account.
[arrow] If you are selling shares held in a corporate or fiduciary account,
please contact the funds' Transfer Agent at (800) 243-1574.
If required, the signature guarantee on your request must be made by an eligible
guarantor institution as defined by the funds' Transfer Agent in accordance with
its signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker-dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
ACCOUNT POLICIES
--------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, Class B or Class C Shares, you can
purchase Class A Shares of any fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not more. Send your written
request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call
us at (800)243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B and Class C shareholders who have
had the contingent deferred sales charge waived because they are in the
Systematic Withdrawal Program are not eligible for this reinstatement privilege.
Phoenix Strategic Equity Series Fund 27
<PAGE>
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
Exchange Privileges
You should carefully read the prospectus of the fund into which you want to
exchange before deciding to make an exchange. You can obtain a prospectus from
your financial advisor or by calling us at (800)243-4361 or accessing our Web
site at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of shares;
e.g., Class A for Class A. Exchange privileges may not be available
for all Phoenix Funds, and may be rejected or suspended.
o Exchanges may be made by phone ((800)243-1574) or by mail (State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than the
minimum initial investment required.
o The exchange of shares is treated as a sale and a purchase for
federal income tax purposes.
o Because excessive trading can hurt fund performance and harm other
shareholders, the funds reserve the right to temporarily or
permanently end exchange privileges or reject an order from anyone
who appears to be attempting to time the market, including investors
who request more than one exchange in any 30-day period. The funds'
underwriter has entered into agreements with certain timing firms
permitting them to exchange by telephone. These privileges are
limited, and the funds' distributor has the right to reject or
suspend them.
RETIREMENT PLANS
Shares of the funds may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SIMPLE IRA, Roth IRA,
401(k) plans, profit-sharing, money purchase plans, and 403(b) plans. For more
information, call (800)243-4361.
INVESTOR SERVICES
--------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your
28 Phoenix Strategic Equity Series Fund
<PAGE>
mutual fund account. Just complete the Investo-Matic Section on the application
and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one Phoenix Fund
to another on a monthly, quarterly, semiannual or annual basis. Shares of one
Phoenix Fund will be exchanged for shares of the same class of another fund at
the interval you select. To sign up, just complete the Systematic Exchange
Section on the application. Exchange privileges may not be available for all
Phoenix Funds, and may be rejected or suspended.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares in another fund, using our customer service telephone service. See the
Telephone Exchange Section on the application. Exchange privileges may not be
available for all Phoenix Funds, and may be rejected or suspended.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
TAX STATUS OF DISTRIBUTIONS
--------------------------------------------------------------------------------
The funds plan to make distributions from net investment income at intervals
stated on the table below and to distribute net realized capital gains, if any,
at least annually.
--------------------------------------------------------------------------------
FUND DIVIDEND PAID
--------------------------------------------------------------------------------
Small Cap Fund Semiannually
--------------------------------------------------------------------------------
Growth Fund Annually
--------------------------------------------------------------------------------
Strategic Theme Fund Semiannually
--------------------------------------------------------------------------------
Distributions of short-term capital gains and net investment income are taxable
to shareholders as ordinary income. Long-term capital gains, if any, distributed
to shareholders and which are designated by the fund as capital gains
distributions, are taxable to shareholders as long-term capital gain
distributions regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and capital gain
distributions are paid in additional shares. All distributions, cash or
additional shares, are subject to federal income tax and may be subject to
state, local and other taxes.
Phoenix Strategic Equity Series Fund 29
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance for the past five years or for the life of the funds. Certain
information reflects financial results for a single fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the funds (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants. Their report, together with the funds' financial
statements, are included in the funds' most recent Annual Report, which is
available upon request.
<TABLE>
<CAPTION>
PHOENIX-ENGEMANN SMALL CAP FUND
CLASS A
-----------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30, 10/16/95 TO
2000 1999 1998 1997 4/30/96
---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.74 $17.37 $14.13 $16.74 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(5) (0.31) (0.14) (0.08) (0.05) (0.04)(1)
Net realized and unrealized gain (loss) 13.91 (0.88) 6.80 (2.53) 6.79
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 13.60 (1.02) 6.72 (2.58) 6.75
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gains -- -- -- (0.01) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) (0.01)
----- ----- ----- ----- -----
Change in net asset value 13.60 (1.63) 3.24 (2.61) 6.74
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $29.34 $15.74 $17.37 $14.13 $16.74
====== ====== ====== ====== ======
Total return(2) 86.40% (5.66)% 52.33% (15.43)% 67.48%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $185,533 $121,313 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.38%(5) 1.46%(5) 1.31% 1.37% 1.50%(3)
Net investment income (loss) (1.22)% (0.95)% (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 113% 276% 498% 325% 103%(4)
</TABLE>
--------------------------
(1) Includes reimbursement of operating expenses by investment advisor of $0.02.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
30 Phoenix Strategic Equity Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-ENGEMANN SMALL CAP FUND
CLASS B
----------------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30, 10/16/95 TO
2000 1999 1998 1997 4/30/96
---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.26 $16.99 $13.98 $16.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.47) (0.25)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) 13.45 (0.87) 6.70 (2.50) 6.77
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 12.98 (1.12) 6.49 (2.67) 6.68
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net realized gains -- -- -- (0.01) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) --
----- ----- ----- ----- -----
Change in net asset value 12.98 (1.73) 3.01 (2.70) 6.68
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $28.24 $15.26 $16.99 $13.98 $16.68
===== ===== ===== ===== =====
Total return(2) 85.06% (6.39)% 51.16% (16.03)% 66.80%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $139,795 $89,349 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.13%(6) 2.21%(6) 2.06% 2.12% 2.26%(3)
Net investment income (loss) (1.97)% (1.70)% (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 113 276% 498% 325% 103%(4)
</TABLE>
--------------------------
(1) Includes reimbursement of operating expenses by investment advisor of $0.02.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
Phoenix Strategic Equity Series Fund 31
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
PHOENIX-SENECA GROWTH FUND
CLASS A
--------------------------------------------------------------
SEVEN FROM
MONTHS INCEPTION
ENDED YEAR ENDED SEPTEMBER 30, 3/8/96 TO
4/30/00 1999 1998 1997 9/30/96
------- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.57 $16.23 $16.28 $13.63 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.04)(1) (0.09)(1) (0.06)(1) (0.08) --
Net realized and unrealized gain 4.84 5.04 1.24 3.50 3.63
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 4.80 4.95 1.18 3.42 3.63
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.23) (0.77) --
----- ----- ----- ----- -----
Change in net asset value 2.26 3.34 (0.05) 2.65 3.63
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $21.83 $19.57 $16.23 $16.28 $13.63
===== ===== ===== ===== =====
Total return(2) 24.81%(4) 31.89% 7.93% 26.51% 36.30%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $46,727 $31,001 $17,364 $6,013 $466
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.31%(3) 1.44% 1.55% 2.48%(5) 1.46%(6)
Net investment income (loss) (0.29)%(3) (0.49)% (0.36)% (0.62)% 0.16%(3)
Portfolio turnover 68%(4) 169% 166% 145.69% 87.66%(4)
</TABLE>
-----------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the periods ended September 30, 1997 and 1996, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the periods ended September 30, 1997 and 1996, respectively.
32 Phoenix Strategic Equity Series Fund
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-SENECA GROWTH FUND
CLASS B
-------------------------------------
SEVEN FROM
MONTHS YEAR INCEPTION
ENDED ENDED 7/1/98 TO
4/30/00 9/30/99 9/30/98
------- ------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $19.28 $16.19 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.17) (0.31) (0.04)
Net realized and unrealized gain
(loss) 4.77 5.01 (2.48)
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 4.60 4.70 (2.52)
----- ----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
----- ----- -----
TOTAL DISTRIBUTIONS (2.54) (1.61) --
----- ----- -----
Change in net asset value 2.06 3.09 (2.52)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $21.34 $19.28 $16.19
===== ===== =====
Total return(2) 24.10%(4) 30.31% (13.47)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $10,431 $4,395 $519
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.42%(3) 2.60%(5) 2.60%(3)(5)
Net investment income (loss) (1.39)%(3) (1.66)% (1.12)%(3)
Portfolio turnover 68%(4) 169% 166%(4)
CLASS C
--------------------------------------
SEVEN FROM
MONTHS YEAR INCEPTION
ENDED ENDED 7/1/98 TO
4/30/00 9/30/99 9/30/98
------- ------- ----------
Net asset value, beginning of period $19.25 $16.18 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.19) (0.32) (0.06)
Net realized and unrealized gain (loss) 4.77 5.00 (2.47)
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 4.58 4.68 (2.53)
----- ----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
----- ----- -----
TOTAL DISTRIBUTIONS (2.54) (1.61) --
----- ----- -----
Change in net asset value 2.04 3.07 (2.53)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $21.29 $19.25 $16.18
===== ===== =====
Total return(2) 24.09%(4) 30.20% (13.52)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,939 $1,833 $126
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.51%(3) 2.60%(6) 2.60%(3)(6)
Net investment income (loss) (1.48)%(3) (1.66)% (1.39)%(3)
Portfolio turnover 68%(4) 169% 166%(4)
</TABLE>
----------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.46% and
12.48% for the periods ended September 30, 1999 and 1999, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 5.67% and
20.24% for the periods ended September 30, 1999 and 1998, respectively.
Phoenix Strategic Equity Series Fund 33
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-SENECA GROWTH FUND
CLASS X
-------------------------------------------------------------------
SEVEN FROM
MONTHS INCEPTION
ENDED YEAR ENDED SEPTEMBER 30, 3/8/96 TO
4/30/00 1999 1998 1997 9/30/96
------- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.92 $16.46 $16.43 $13.74 $10.00
INCOME FROM INVESTMENT OPERATIONS
(0.01)(1) (0.04)(1) 0.00(1) 0.03 0.03
Net investment income (loss)
Net realized and unrealized gain 4.94 5.11 1.28 3.50 3.71
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 4.93 5.07 1.28 3.53 3.74
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.02) (0.07) --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.25) (0.84) --
----- ----- ----- ----- -----
Change in net asset value 2.39 3.46 0.03 $2.69 3.74
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $22.31 $19.92 $16.46 $16.43 $13.74
===== ===== ===== ===== =====
Total return(2) 25.04%(4) 32.19% 8.48% 27.27% 37.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $40,174 $35,695 $30,713 $34,093 $12,920
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.06%(3) 1.16% 1.14% 1.52%(5) 0.81%(3)(5)
Net investment income (loss) (0.05)%(3) (0.20)% 0.02% 0.31% 0.76%(3)
Portfolio turnover 68%(4) 169% 166% 145.69% 87.66%(4)
</TABLE>
---------------------
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the periods ended September 30, 1997 and 1996, respectively.
34 Phoenix Strategic Equity Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PHOENIX-SENECA STRATEGIC THEME FUND
CLASS A
----------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30, 10/16/95 TO
2000 1999 1998 1997 4/30/96
---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.22 $13.70 $12.03 $12.37 $10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.16) (0.11) (0.04) 0.06 0.00(1)
Net realized and unrealized gain (loss) 8.69 6.03 4.03 (0.38) 2.39
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 8.53 5.92 3.99 (0.32) 2.39
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.01) --
Dividends from net realized gains (4.13) (1.40) (2.29) -- --
In excess of net investment income -- -- (0.03) -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.02)
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.32) (0.02) (0.02)
----- ----- ----- ----- -----
Change in net asset value 4.40 4.52 1.67 (0.34) 2.37
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $22.62 $18.22 $13.70 $12.03 $12.37
===== ===== ===== ===== =====
Total return(2) 53.26% 44.91% 36.22% (2.57)% 23.89%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $620,919 $107,871 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.29%(7) 1.38%(7) 1.33% 1.40% 1.40%(3)
Net investment income (loss) (0.77)% (0.72)% (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 157% 205% 618% 532% 175%(4)
</TABLE>
---------------------
(1) Includes reimbursement of operating expenses by investment advisor of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(7) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
Phoenix Strategic Equity Series Fund 35
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PHOENIX-SENECA STRATEGIC THEME FUND
CLASS B
---------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30, 10/16/95 TO
2000 1999 1998 1997 4/30/96
---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.46 $11.91 $12.33 $10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.28) (0.22) (0.14) (0.03) (0.06)(1)
Net realized and unrealized gain (loss) 8.36 5.91 3.98 (0.38) 2.40
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 8.08 5.69 3.84 (0.41) 2.34
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (4.13) (1.40) (2.29) -- --
In excess of net investment income -- -- -- -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.01)
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.29) (0.01) (0.01)
----- ----- ----- ----- -----
Change in net asset value 3.95 4.29 1.55 (0.42) 2.33
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $21.70 $17.75 $13.46 $11.91 $12.33
===== ===== ===== ===== =====
Total return(2) 52.03% 43.98% 35.18% (3.31)% 23.41%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $157,169 $84,698 $66,107 $49,843 $11,920
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.04%(7) 2.13%(7) 2.08% 2.15% 2.16%(3)
Net investment income (loss) (1.47)% (1.48)% (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover 157% 205% 618% 532% 175%(4)
</TABLE>
<TABLE>
<CAPTION>
PHOENIX-SENECA STRATEGIC THEME FUND
CLASS C
-----------------------------------------
FROM
INCEPTION
YEAR ENDED APRIL 30, 11/3/97 TO
2000 1999 4/30/98
---- ---- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.47 $14.93
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.29) (0.22) (0.05)
Net realized and unrealized gain (loss) 8.38 5.90 0.88
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 8.09 5.68 0.83
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains (4.13) (1.40) (2.29)
----- ----- -----
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.29)
----- ----- -----
Change in net asset value 3.96 4.28 (1.46)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $21.71 $17.75 $13.47
===== ===== =====
Total return(2) 52.09% 43.87% 7.92%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,156 $682 $267
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.04%(7) 2.13%(7) 2.08%(3)
Net investment income (loss) (1.53)% (1.47)% (0.87)%(3)
Portfolio turnover 157% 205% 618%(4)
</TABLE>
------------------------
(1) Includes reimbursement of operating expenses by investment advisor of $0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(7) The ratio of operating expenses to average net assets excludes the effect of
expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
36 Phoenix Strategic Equity Series Fund
<PAGE>
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The funds have filed a Statement of Additional Information about the funds,
dated August 28, 2000, with the Securities and Exchange Commission. The
Statement contains more detailed information about the funds. It is incorporated
into this prospectus by reference and is legally part of the prospectus. You may
obtain a free copy of the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC,
[arrow] by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
[arrow] by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The funds semiannually mail to shareholders detailed reports containing
information about each fund's investments. The funds' Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from May 1 through April 30. You
may request a free copy of the funds' Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
SEC File Nos. 33-6931 and 811-4727 [recycle logo] Printed on recycled
paper using soybean ink
Phoenix Strategic Equity Series Fund 37
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com
PXP 690 (8/00)
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
PHOENIX-SENECA GROWTH FUND
PHOENIX-SENECA STRATEGIC THEME FUND
101 Munson Street
Greenfield, MA 01301
STATEMENT OF ADDITIONAL INFORMATION
August 28, 2000
This Statement of Additional Information is not a prospectus, but expands upon
and supplements the information contained in the current Prospectus of the
Phoenix Strategic Equity Series Fund (the "Trust"), dated August 28, 2000, and
should be read in conjunction with it. The Trust's Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
----
The Trust............................................................... 1
Investment Restrictions................................................. 1
Investment Techniques and Risks......................................... 2
Performance Information ................................................ 9
Portfolio Turnover...................................................... 10
Portfolio Transactions and Brokerage.................................... 10
Services of the Advisers................................................ 11
Net Asset Value......................................................... 12
How to Buy Shares....................................................... 13
Alternative Purchase Arrangements....................................... 13
Investor Account Services............................................... 16
How to Redeem Shares.................................................... 17
Dividends, Distributions and Taxes...................................... 18
Tax Sheltered Retirement Plans.......................................... 19
The Distributor......................................................... 20
Distribution Plans...................................................... 21
Management of the Trust ................................................ 22
Additional Information.................................................. 29
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP731 (8/00)
<PAGE>
THE TRUST
Phoenix Strategic Equity Series Fund (the "Trust") is a diversified open-end
management investment company which was organized under Massachusetts law in
1986 as a business trust and was reorganized as a Delaware business trust in
August 2000. The Trust's Prospectus describes the investment objectives of the
Phoenix-Seneca Growth Fund (the "Growth Fund"), formerly the Phoenix-Seneca
Equity Opportunities Fund, the Phoenix-Seneca Strategic Theme Fund (the "Theme
Fund"), and the Phoenix-Engemann Small Cap Fund (the "Small Cap Fund"). The
Growth Fund, Theme Fund and Small Cap Fund are sometimes collectively referred
to as the "Funds."
The Funds' Prospectus describes the investment objectives of the Funds and
the principal strategies that each Fund will employ in seeking to achieve its
investment objective. Each Fund's investment objective is a fundamental policy
and may not be changed without a vote of the majority of the outstanding shares
of the respective Fund. The following discussion describes the Funds' investment
policies and techniques and supplements the description of each Fund's principal
strategies in the Prospectus.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust with
respect to each of the Funds. Except as otherwise stated, these investment
restrictions are "fundamental" policies. A "fundamental" policy is defined in
the 1940 Act to mean that the restriction cannot be changed without the vote of
a "majority of the outstanding voting securities" of the Fund. A majority of the
outstanding voting securities is defined in the 1940 Act as the lesser of (a)
67% or more of the voting securities present at a meeting if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy, or (b) more than 50% of the outstanding voting securities.
A Fund may not:
(1) With respect to 75% of its total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or authorities
or repurchase agreements collateralized by U.S. Government securities and other
investment companies), if: (a) such purchase would, at the time, cause more than
5% of the Fund's total assets taken at market value to be invested in the
securities of such issuer; or (b) such purchase would, at the time, result in
more than 10% of the outstanding voting securities of such issuer being held by
the Fund.
(2) Purchase securities if, after giving effect to the purchase, more than 25%
of its total assets would be invested in the securities of one or more issuers
conducting their principal business activities in the same industry (excluding
the U.S. Government, its agencies or instrumentalities).
(3) Borrow money, except (i) in amounts not to exceed one third of the value
of the Fund's total assets (including the amount borrowed) from banks, and (ii)
up to an additional 5% of its total assets from banks or other lenders for
temporary purposes. For purposes of this restriction, (a) investment techniques
such as margin purchases, short sales, forward commitments, and roll
transactions, (b) investments in instruments such as futures contracts, swaps,
and options and (c) short-term credits extended in connection with trade
clearance and settlement, shall not constitute borrowing.
(4) Issue "senior securities" in contravention of the 1940 Act. Activities
permitted by SEC exemptive orders or staff interpretations shall not be deemed
to be prohibited by this restriction.
(5) Underwrite the securities issued by other persons, except to the extent
that, in connection with the disposition of portfolio securities, the Fund may
be deemed to be an underwriter under applicable law.
(6) Purchase or sell real estate, except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in mortgage-related
securities and other securities that are secured by real estate or interests
therein, (iv) hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
(7) Purchase or sell commodities or commodity contracts, except the Fund may
purchase and sell derivatives (including, but not limited to, options, futures
contracts and options on futures contracts) whose value is tied to the value of
a financial index or a financial instrument or other asset (including, but not
limited to, securities indexes, interest rates, securities, currencies and
physical commodities).
(8) Make loans, except that the Fund may (i) lend portfolio securities, (ii)
enter into repurchase agreements, (iii) purchase all or a portion of an issue of
debt securities, bank loan participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the securities and (iv)
participate in an interfund lending program with other registered investment
companies.
If any percentage restriction described above for the Fund is adhered to at
the time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the Fund's assets will not constitute a
violation of the restriction.
1
<PAGE>
INVESTMENT TECHNIQUES
The Funds may utilize the following practices or techniques in pursuing their
investment objectives.
CONVERTIBLE SECURITIES
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive interest generally paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Convertible securities have several unique investment
characteristics such as (1) higher yields than common stocks, but lower yields
than comparable nonconvertible securities, (2) a lesser degree of fluctuation in
value than the underlying stock since they have fixed income characteristics,
and (3) the potential for capital appreciation if the market price of the
underlying common stock increases. A convertible security might be subject to
redemption at the option of the issuer at a price established in the convertible
security's governing instrument. If a convertible security held by a Fund is
called for redemption, the Fund may be required to permit the issuer to redeem
the security, convert it into the underlying common stock or sell it to a third
party.
LOWER RATED CONVERTIBLE SECURITIES. Each Fund may invest in convertible
securities that are rated below investment grade (commonly referred to as "junk"
securities). Convertible securities which are not rated in the four highest
categories, in which a Fund may invest, are predominantly speculative with
respect to the issuer's capacity to repay principal and interest and may include
issues on which the issuer defaults.
DERIVATIVE INVESTMENTS
In order to hedge various portfolio positions, including to hedge against
price movements in markets in which the Funds anticipate increasing their
exposure, the Funds may invest in certain instruments which may be characterized
as derivative investments. These investments include various types of interest
rate transactions, options and futures. Such investments also may consist of
indexed securities. Other of such investments have no express quantitative
limitations, although they may be made solely for hedging purposes, not for
speculation, and may in some cases be limited as to the type of counter-party
permitted. Interest rate transactions involve the risk of an imperfect
correlation between the index used in the hedging transactions and that
pertaining to the securities which are the subject of such transactions.
Similarly, utilization of options and futures transactions involves the risk of
imperfect correlation in movements in the price of options and futures and
movements in the price of the securities or interest rates which are the subject
of the hedge. Investments in indexed securities, including inverse securities,
subject the Funds to the risks associated with changes in the particular
indices, which may include reduced or eliminated interest payments and losses of
invested principal.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund may use financial futures contracts and related options to hedge
against changes in the market value of its portfolio securities or securities
which it intends to purchase. Hedging is accomplished when an investor takes a
position in the futures market opposite to his cash market position. There are
two types of hedges--long (or buying) and short (or selling) hedges.
Historically, prices in the futures market have tended to move in concert with
cash market prices, and prices in the futures market have maintained a fairly
predictable relationship to prices in the cash market. Thus, a decline in the
market value of securities in a Fund's portfolio may be protected against to a
considerable extent by gains realized on futures contracts sales. Similarly, it
is possible to protect against an increase in the market price of securities
which a Fund may wish to purchase in the future by purchasing futures contracts.
These Funds may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures contracts
consist of interest rate futures contracts and securities index futures
contracts. A public market presently exists in interest rate futures contracts
covering long-term U.S. Treasury bonds, U.S. Treasury notes, three-month U.S.
Treasury bills and GNMA certificates. Securities index futures contracts are
currently traded with respect to the Standard & Poor's 500 Composite Stock Price
Index and such other broad-based stock market indices as the New York Stock
Exchange Composite Stock Index and the Value Line Composite Stock Price Index. A
clearing corporation associated with the exchange or board of trade on which a
financial futures contract trades assumes responsibility for the completion of
transactions and also guarantees that open futures contracts will be performed.
In contrast to the situation when such Fund purchases or sells a security, no
security is delivered or received by these Funds upon the purchase or sale of a
financial futures contract. Initially, these Funds will be required to deposit
in a segregated account with its custodian bank an amount of cash, U.S. Treasury
bills or liquid high grade debt obligations. This amount is known as initial
margin and is in the nature of a performance bond or good faith deposit on the
contract. The current initial margin deposit required per contract is
approximately 5% of the contract amount. Brokers may establish deposit
requirements higher than this minimum. Subsequent payments, called variation
margin, will be made to and from the account on a daily basis as the price of
the futures contract fluctuates. This process is known as marking to market.
2
<PAGE>
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts. Upon
exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
Although financial futures contracts by their terms call for actual delivery
or acceptance of securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out is
accomplished by effecting an offsetting transaction. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller immediately would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same securities and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
Such Fund will pay commissions on financial futures contracts and related
options transactions. These commissions may be higher than those which would
apply to purchases and sales of securities directly.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS. A Fund may not engage
in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its portfolio securities or securities which it intends to
purchase. At the time of purchase of a futures contract or a call option on a
futures contract, any asset, including equity securities and noninvestment grade
debt so long as the asset is liquid, unencumbered and marked to market daily
("liquid assets"), equal to the market value of the futures contract minus a
Fund's initial margin deposit with respect thereto will be deposited in a
pledged account with the Trust's custodian bank to collateralize fully the
position and thereby ensure that it is not leveraged.
The extent to which a Fund may enter into financial futures contracts and
related options also may be limited by the requirements of the Internal Revenue
Code for qualifications as a regulated investment company. See "Dividends,
Distributions and Taxes."
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS. Positions in futures
contracts and related options may be closed out only on an exchange which
provides a secondary market for such contracts or options. A Fund will enter
into an option or futures position only if there appears to be a liquid
secondary market. However, there can be no assurance that a liquid secondary
market will exist for any particular option or futures contract at any specific
time. Thus, it may not be possible to close out a futures or related option
position. In the case of a futures position, in the event of adverse price
movements a Fund would continue to be required to make daily margin payments. In
this situation, if a Fund has insufficient cash to meet daily margin
requirements it may have to sell portfolio securities at a time when it may be
disadvantageous to do so. In addition, a Fund may be required to take or make
delivery of the securities underlying the futures contracts it holds. The
inability to close out futures positions also could have an adverse impact on a
Fund's ability to hedge its portfolio effectively.
There are several risks in connection with the use of futures contracts as a
hedging device. While hedging can provide protection against an adverse movement
in market prices, it can also preclude a hedger's opportunity to benefit from a
favorable market movement. In addition, investing in futures contracts and
options on futures contracts will cause a Fund to incur additional brokerage
commissions and may cause an increase in a Fund's portfolio turnover rate.
The successful use of futures contracts and related options also depends on
the ability of the Adviser to forecast correctly the direction and extent of
market movements within a given time frame. To the extent market prices remain
stable during the period a futures contract or option is held by a Fund or such
prices move in a direction opposite to that anticipated, a Fund may realize a
loss on the hedging transaction which is not offset by an increase in the value
of its portfolio securities. As a result, a Fund's return for the period may be
less than if it had not engaged in the hedging transaction.
Utilization of futures contracts by a Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, a
Fund will experience a gain or loss which will not be completely offset by
movements in the price of the securities. It is possible that, where a Fund has
sold futures contracts to hedge its portfolio against decline in the market, the
market may advance and the value of securities held in a Fund's portfolio may
decline. If this occurred, a Fund would lose money on the futures contract and
would also experience a decline in value in its portfolio securities. Where
futures are purchased to hedge against a possible increase in the prices of
securities before a Fund is able to invest its cash (or cash equivalents) in
securities (or options) in an orderly fashion, it is possible that the market
may decline; if a Fund then determines not to invest in securities (or options)
at that time because of concern as to possible further market decline or for
other reasons, a Fund will realize a loss on the futures that would not be
offset by a reduction in the price of the securities purchased.
3
<PAGE>
The market prices of futures contracts may be affected if participants in the
futures market also elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such case,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities rather than
to engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price
distortions. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of market trends may still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put or
call options on futures contracts involves less potential risk for a Fund
because the maximum amount at risk is the premium paid for the options plus
transaction costs. However, there may be circumstances when the purchase of an
option on a futures contract would result in a loss to a Fund while the purchase
or sale of the futures contract would not have resulted in a loss, such as when
there is no movement in the price of the underlying securities.
FOREIGN CURRENCY TRANSACTIONS
Each Fund may engage in foreign currency transactions. The following is a
description of these transactions:
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days ("Term") from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers.
No Fund will enter into such forward contracts or maintain a net exposure in
such contracts where it would be obligated to deliver an amount of foreign
currency in excess of the value of its portfolio securities and other assets
denominated in that currency. The Adviser believes that it is important to have
the flexibility to enter into such forward contracts when it determines that to
do so is in the best interests of a Fund. The Trust's custodian bank will be
instructed to pledge liquid assets equal to the value of such contracts. If the
value of the securities pledged declines, additional cash or securities will be
added so that the pledged amount is not less than the amount of the Fund's
commitments with respect to such contracts. Generally, no Fund will enter into a
forward contract with a term longer than one year.
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option buyer
with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if a Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if a Fund had
entered into a contract to purchase a security denominated in a foreign currency
and had purchased a foreign currency call to hedge against a rise in the value
of the currency but instead the currency had depreciated in value between the
date of purchase and the settlement date, the Fund would not have to exercise
its call but could acquire in the spot market the amount of foreign currency
needed for settlement.
FOREIGN CURRENCY FUTURES TRANSACTIONS. Each Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts, but
more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency futures
contracts and options on foreign currency futures contracts are standardized as
to amount and delivery period and are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts may provide greater liquidity
and lower cost than forward foreign currency exchange contracts.
FOREIGN SECURITIES
Each of the Funds may purchase foreign securities, including those issued by
foreign branches of U.S. banks. Investing in the securities of foreign companies
involves special risks and considerations not typically associated with
investing in U.S. companies. These include differences in accounting, auditing
and financial reporting standards, generally higher commission rates on foreign
portfolio transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment or exchange control
regulations, political
4
<PAGE>
instability which could affect U.S. investments in foreign countries, and
potential restrictions on the flow of international capital. Additionally,
dividends payable on foreign securities may be subject to foreign taxes withheld
prior to distribution. Foreign securities often trade with less frequency and
volume than domestic securities and therefore may exhibit greater price
volatility, and changes in foreign exchange rates will affect the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar.
Many of the foreign securities held by each Fund will not be registered with
the Commission and the issuers thereof will not be subject to the Commission's
reporting requirements. Accordingly, there may be less publicly available
information about the securities and about the foreign company or government
issuing them than is available about a domestic company or government entity.
Moreover, individual foreign economies may differ favorably or unfavorably from
the United States economy in such respects as growth of Gross National Product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payment positions.
In investing in securities denominated in foreign currencies, the Fund will be
subject to the additional risk of currency fluctuations. An adverse change in
the value of a particular foreign currency as against the U.S. dollar, to the
extent that such change is not offset by a gain in other foreign currencies,
will result in a decrease in the Fund's assets. Any such change may also have
the effect of decreasing or limiting the income available for distribution.
Foreign currencies may be affected by revaluation, adverse political and
economic developments, and governmental restrictions. Although the Fund will
invest only in securities denominated in foreign currencies that are fully
convertible into U.S. dollars without legal restriction at the time of
investment, no assurance can be given that currency exchange controls will not
be imposed on any particular currency at a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic issuers
and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the relevant
jurisdiction, which may reduce the yield on the securities to the Funds and
which may not be recoverable by the Funds or their investors.
The Funds will calculate their net asset values and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which the Funds may invest may be primarily listed on foreign stock exchanges
which may trade on other days (such as Saturdays). As a result, the net asset
value of the Funds' portfolios may be affected by such trading on days when a
shareholder has no access to the Funds.
Investment income received by the Funds from sources within foreign countries
may be subject to foreign income taxes withheld at the source. If a Fund should
have more than 50% of the value of its assets invested in securities of foreign
corporations at the close of its taxable year, the Fund may elect to pass
through to its shareholders their proportionate shares of foreign income taxes
paid. Investors are urged to consult their tax attorney with respect to specific
questions regarding foreign, federal, state or local taxes.
The Trust may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the care
of eligible foreign custodians will be limited to an amount reasonably necessary
to effect the Funds' foreign securities transactions. The use of a foreign
custodian invokes considerations which are not ordinarily associated with
domestic custodians. These considerations include the possibility of
expropriations, restricted access to books and records of the foreign custodian,
inability to recover assets that are lost while under the control of the foreign
custodian, and the impact of political, social or diplomatic developments.
LENDING PORTFOLIO SECURITIES
In order to increase its return on investments, the Theme Fund and Small Cap
Fund may make loans of its portfolio securities, as long as the market value of
the loaned securities does not exceed 33% of the market or other fair value of
that Fund's net assets. Loans of portfolio securities will always be fully
collateralized by cash, U.S. Government Securities or other high quality debt
securities at no less than 100% of the market value of the loaned securities (as
marked to market daily) and made only to borrowers considered by the Adviser to
be creditworthy. Lending portfolio securities involves a risk of delay in the
recovery of the loaned securities and possibly the loss of the collateral if the
borrower fails financially.
LEVERAGE
The Funds may, from time to time, increase the Theme Fund's and Small Cap
Fund's ownership of securities holdings above the amounts otherwise possible by
borrowing from banks at fixed amounts of interest and investing the borrowed
funds. These Funds will borrow only from banks, and only if immediately after
such borrowing the value of the assets of these Funds (including the amount
borrowed) less its liabilities (not including any borrowings) is at least three
times the amount of funds borrowed for investment purposes. The effect of this
provision is to permit the Funds to borrow up to 33(1)/(3)% of the net assets of
these Funds, not including the proceeds of any such borrowings. However, the
amount of the borrowings will be dependent
5
<PAGE>
upon the availability and cost of credit from time to time. If, due to market
fluctuations or other reasons, the value of such Fund's assets computed as
provided above becomes at any time less than three times the amount of the
borrowings for investment purposes, these Funds, within three business days, is
required to reduce bank debt to the extent necessary to meet the required 300%
asset coverage.
Interest on money borrowed will be an expense of these Funds with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Funds is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of the Fund with respect to
which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of these Funds' shares to rise
faster than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the monies borrowed) to these Funds, the net
asset value of these Funds will decrease faster than would otherwise be the
case.
OPTIONS
All Funds may write covered call options and purchase call and put options.
Options and the related risks are summarized below.
WRITING AND PURCHASING OPTIONS. Call options written by a Fund normally will
have expiration dates between three and nine months from the date written.
During the option period a Fund may be assigned an exercise notice by the
broker-dealer through which the call option was sold, requiring the Fund to
deliver the underlying security (or cash in the case of securities index calls)
against payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time as the Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once the Fund has received an exercise notice.
The exercise price of a call option written by a Fund may be below, equal to
or above the current market value of the underlying security or securities index
at the time the option is written.
A multiplier for an index option performs a function similar to the unit of
trading for an option on an individual security. It determines the total dollar
value per contract of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Securities indices for which options are currently traded include the Standard
& Poor's 100 and 500 Composite Stock Price Indices, Computer/Business Equipment
Index, Major Market Index, Amex Market Value Index, Computer Technology Index,
Oil and Gas Index, NYSE Options Index, Gaming/Hotel Index, Telephone Index,
Transportation Index, Technology Index, and Gold/Silver Index. A Fund may write
call options and purchase call and put options on any other indices traded on a
recognized exchange.
Closing purchase transactions will ordinarily be effected to realize a profit
on an outstanding call option written by a Fund to prevent an underlying
security from being called, or to enable a Fund to write another call option
with either a different exercise price or expiration date or both. A Fund may
realize a net gain or loss from a closing purchase transaction depending upon
whether the amount of the premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. If a call option
written by a Fund expires unexercised, a Fund will realize a gain in the amount
of the premium on the option less the commission paid.
The option activities of a Fund may increase its portfolio turnover rate and
the amount of brokerage commissions paid. A Fund will pay a commission each time
it purchases or sells a security in connection with the exercise of an option.
These commissions may be higher than those which would apply to purchases and
sales of securities directly.
LIMITATIONS ON OPTIONS. A Fund may write call options only if they are
covered and if they remain covered so long as a Fund is obligated as a writer.
If a Fund writes a call option on an individual security, a Fund will own the
underlying security at all times during the option period. A Fund will write
call options on indices only to hedge in an economically appropriate way
portfolio securities which are not otherwise hedged with options or financial
futures contracts. Call options on securities indices written by a Fund will be
"covered" by identifying the specific portfolio securities being hedged.
To secure the obligation to deliver the underlying security, the writer of a
covered call option on an individual security is required to deposit the
underlying security or other assets in escrow with the broker in accordance with
clearing corporation and exchange rules. In the case of an index call option
written by a Fund, a Fund will be required to deposit qualified securities. A
"qualified security" is a security against which a Fund has not written a call
option and which has not been hedged by a Fund by
6
<PAGE>
the sale of a financial futures contract. If at the close of business on any
day the market value of the qualified securities falls below 100% of the current
index value times the multiplier times the number of contracts, a Fund will
deposit an amount of cash or liquid assets equal in value to the difference. In
addition, when a Fund writes a call on an index which is "in-the-money" at the
time the call is written, a Fund will segregate with its custodian bank cash or
liquid assets equal in value to the amount by which the call is "in-the-money"
times the multiplier times the number of contracts. Any amount segregated may be
applied to a Fund's obligation to segregate additional amounts in the event that
the market value of the qualified securities falls below 100% of the current
index value times the multiplier times the number of contracts.
A Fund may invest in exchange-traded or over-the-counter call and put
options. A Fund may sell a call option or a put option which it has previously
purchased prior to the purchase (in the case of a call) or the sale (in the case
of a put) of the underlying security. Any such sale of a call option or a put
option would result in a net gain or loss, depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid.
In connection with a Fund qualifying as a regulated investment company under
the Internal Revenue Code, other restrictions on a Fund's ability to enter into
option transactions may apply from time to time. See "Dividends, Distributions
and Taxes."
RISKS RELATING TO OPTIONS. During the option period, the writer of a call
option has, in return for the premium received on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. The writer has no control
over the time when it may be required to fulfill its obligation as a writer of
the option.
The risk of purchasing a call option or a put option is that a Fund may lose
the premium it paid plus transaction costs. If a Fund does not exercise the
option and is unable to close out the position prior to expiration of the
option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Fund will write
and purchase options only when the Adviser believes that a liquid secondary
market will exist for options of the same series, there can be no assurance that
a liquid secondary market will exist for a particular option at a particular
time and that a Fund, if it so desires, can close out its position by effecting
a closing transaction. If the writer of a covered call option is unable to
effect a closing purchase transaction, it cannot sell the underlying security
until the option expires or the option is exercised. Accordingly, a covered call
writer may not be able to sell the underlying security at a time when it might
otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an exchange
include: (i) insufficient trading interest in certain options; (ii) restrictions
on transactions imposed by an exchange; (iii) trading halts, suspensions or
other restrictions imposed with respect to particular classes or series of
options or underlying securities; (iv) inadequacy of the facilities of an
exchange or the clearing corporation to handle trading volume; and (v) a
decision by one or more exchanges to discontinue the trading of options or
impose restrictions on orders.
Each exchange has established limitations governing the maximum number of call
options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions. The Adviser believes that the position limits
established by the exchanges will not have any adverse impact upon a Fund or all
of the Funds, in the aggregate.
RISKS OF OPTIONS ON INDICES. Because the value of an index option depends
upon movements in the level of the index rather than movements in the price of a
particular security, whether a Fund will realize a gain or loss on the purchase
or sale of an option on an index depends upon movements in the level of prices
in the market generally or in an industry or market segment rather than upon
movements in the price of an individual security. Accordingly, successful use by
a Fund of options on indices will be subject to the Adviser's ability to predict
correctly movements in the direction of the market generally or in the direction
of a particular industry. This requires different skills and techniques than
predicting changes in the prices of individual securities.
Index prices may be distorted if trading of certain securities included in the
index is interrupted. Trading in index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
securities included in the index. If this occurred, a Fund would not be able to
close out options which it had written or purchased and, if restrictions on
exercise were imposed, might be unable to exercise an option it purchased, which
would result in substantial losses to a Fund. However, it is the Trust's policy
to write or purchase options only on indices which include a sufficient number
of securities so that the likelihood of a trading halt in the index is
minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance and,
unlike call writing on portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying securities.
Consequently, a Fund will write call options on indices only subject to the
limitations described above.
7
<PAGE>
Price movements in securities in a Fund's portfolio will not correlate
perfectly with movements in the level of the index and, therefore, a Fund bears
the risk that the price of the securities held by the Fund may not increase as
much as the level of the index. In this event, the Fund would bear a loss on the
call which would not be completely offset by movements in the prices of a Fund's
portfolio securities. It is also possible that the index may rise when the value
of a Fund's portfolio securities does not. If this occurred, the Fund would
experience a loss on the call which would not be offset by an increase in the
value of its portfolio and might also experience a loss in the market value of
portfolio securities.
Unless a Fund has other liquid assets which are sufficient to satisfy the
exercise of a call on an index, a Fund will be required to liquidate portfolio
securities in order to satisfy the exercise. Because an exercise must be settled
within hours after receiving the notice of exercise, if a Fund fails to
anticipate an exercise, to the extent permissible, it may have to borrow from a
bank pending settlement of the sale of securities in its portfolio and pay
interest on such borrowing.
When a Fund has written a call on an index, there is also a risk that the
market may decline between the time a Fund has the call exercised against it, at
a price which is fixed as of the closing level of the index on the date of
exercise, and the time a Fund is able to sell securities in its portfolio. As
with options on portfolio securities, a Fund will not learn that a call has been
exercised until the day following the exercise date but, unlike a call on a
portfolio security where a Fund would be able to deliver the underlying security
in settlement, a Fund may have to sell part of its portfolio securities in order
to make settlement in cash, and the price of such securities might decline
before they could be sold.
If a Fund exercises a put option on an index which it has purchased before
final determination of the closing index value for that day, it runs the risk
that the level of the underlying index may change before closing. If this change
causes the exercised option to fall "out-of-the-money" a Fund will be required
to pay the difference between the closing index value and the exercise price of
the option (multiplied by the applicable multiplier) to the assigned writer.
Although a Fund may be able to minimize this risk by withholding exercise
instructions until just before the daily cutoff time or by selling rather than
exercising an option when the index level is close to the exercise price, it may
not be possible to eliminate this risk entirely because the cutoff times for
index options may be earlier than those fixed for other types of options and may
occur before definitive closing index values are announced.
PRIVATE PLACEMENTS AND RULE 144A SECURITIES
Each Fund may purchase securities which have been privately issued and are
subject to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the Commission. Such
securities may offer higher yields than comparable publicly traded securities.
Such securities ordinarily can be sold by these Funds in secondary market
transactions to certain qualified investors pursuant to rules established by the
Commission, in privately negotiated transactions to a limited number of
purchasers or in a public offering made pursuant to an effective registration
statement under the Securities Act of 1933 (the "1933 Act"). Public sales of
such securities by the Funds may involve significant delays and expense. Private
sales often require negotiation with one or more purchasers and may produce less
favorable prices than the sale of similar unrestricted securities. Public sales
generally involve the time and expense of the preparation and processing of a
registration statement under the 1933 Act (and the possible decline in value of
the securities during such period) and may involve the payment of underwriting
commissions. In some instances, these Funds may have to bear certain costs of
registration in order to sell such shares publicly. Except in the case of
securities sold to qualifying institutional investors under special rules
adopted by the Commission for which the Trustees of these Funds determine the
secondary market is liquid. Rule 144A securities will be considered illiquid.
Trustees of these Funds may determine the secondary market is liquid based upon
the following factors which will be reviewed periodically as required pursuant
to procedures adopted by these Funds: the number of dealers willing to purchase
or sell the security; the frequency of trades; dealer undertakings to make a
market in the security, and the nature of the security and its market. Investing
in Rule 144A Securities could have the effect of increasing the level of these
Fund's illiquidity to the extent that qualified institutional buyers become, for
a time, uninterested in purchasing these securities.
REPURCHASE AGREEMENTS
Repurchase Agreements are agreements by which the Funds purchases a security
and obtains a simultaneous commitment from the seller (a member bank of the
Federal Reserve System or, to the extent permitted by the Investment Company Act
of 1940, a recognized securities dealer) that the seller will repurchase the
security at an agreed upon price and date. The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated to the coupon
rate on the purchased security.
A repurchase transaction is usually accomplished either by crediting the
amount of securities purchased to the account of the custodian of the Funds
maintained in a central depository of book-entry system or by physical delivery
of the securities to the Trust's custodian in return for delivery of the
purchase price to the seller. Repurchase transactions are intended to be
short-term transactions with the seller repurchasing the securities, usually
within seven days.
Even though repurchase transactions usually do not impose market risks on the
purchasing Fund, if the seller of the repurchase agreement defaults and does not
repurchase the underlying securities, the Fund might incur a loss if the value
of the underlying securities declines, and disposition costs may be incurred in
connection with liquidating the underlying securities. In addition, if
bankruptcy proceedings are commenced regarding the seller, realization upon the
underlying securities may be delayed or limited, and a loss may be incurred if
the underlying securities decline in value.
8
<PAGE>
SMALL CAP ISSUERS
Market capitalizations of small capitalization companies are determined at the
time of purchase. While the issuers in which the Fund will primarily invest may
offer greater opportunities for capital appreciation than larger capitalization
issuers, investments in smaller companies may involve greater risks and thus may
be considered speculative. For example, small companies may have limited product
lines, markets or financial resources, or they may be dependent on a limited
management group. Full development of these companies takes time and, for this
reason, the Fund should be considered as a long-term investment and not as a
vehicle for seeking short-term profits, nor should an investment in the Fund be
considered a complete investment program. In addition, many small company stocks
trade less frequently and in smaller volume, and may be subject to more abrupt
or erratic price movements than stocks of large companies. The securities of
small companies may also be more sensitive to market changes than the securities
of large companies. These factors may result in above-average fluctuations in
the net asset value of the Fund's shares.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements or
reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as the yield of a Class or
Fund and as the total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in such Class of Shares of a Fund
over periods of 1, 5 and 10 years or up to the life of a Fund, calculated for
each Class separately pursuant to the following formula: P(1 + T)n = ERV (where
P = a hypothetical initial payment of $1,000, T = the average annual total
return, n = the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All total
return figures reflect the deduction of a proportional share of each Class's
expenses (on an annual basis), deduction of the maximum initial sales load in
the case of Class A Shares and the maximum contingent deferred sales charge
applicable to a complete redemption of the investment in the case of Class B and
Class C Shares, and assume that all dividends and distributions are reinvested
when paid. Performance data quoted for Class C Shares covering periods prior to
the inception of Class C Shares will reflect historical performance of Class A
Shares adjusted for the higher operating expenses applicable to Class C Shares.
The Funds may, from time to time, include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare its performance results to other investment
or savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week and Investor's Business Daily, Stanger's Mutual
Fund Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall
Street Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard & Poor's The Outlook, and Personal Investor. The Funds
may, from time to time, illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of the Funds
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Standard & Poor's 400 MidCap Index ("S&P 400"), Dow Jones
Industrial Average, Russell 2000 Index, Russell 2000 Growth Index, Europe
Australia Far East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate
Index and Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time,
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital gains
components; or cite separately as a return figure the equity or bond portion of
a Fund's portfolio; or compare a Fund's equity or bond return future to
well-known indices of market performance, including, but not limited to: the S&P
500, Dow Jones Industrial Average, CS First Boston High Yield Index and Salomon
Brothers Corporate and Government Bond Indices.
The average annual total return of the Small Cap Fund Class A Shares for the
1-year period ended April 30, 2000 and since inception October 16, 1995 to April
30, 2000, was 75.69% and 32.38%, respectively. The average annual total return
of the Small Cap Fund Class B Shares for the 1-year period ended April 30, 2000
and since inception October 16, 1995 to April 30, 2000, was 81.06% and 32.96%,
respectively. The average annual total return of the Growth Fund Class A Shares
for the seven-month period ended April 30, 2000 and since inception March 8,
1996 to April 30, 2000, was 17.63% and 29.13%, respectively. The average annual
total return of the Growth Fund Class B Shares for the seven-month period ended
April 30, 2000 and since inception July 1, 1998 to April 30, 2000 was 19.10% and
18.23%, respectively. The average annual total return of the Growth Fund Class C
Shares for the seven-month period ended April 30, 2000 and since inception July
1, 1998 to April 30, 2000 was 23.09% and 20.01%, respectively. The average
annual total return of the Growth Fund Class X Shares for the seven-
9
<PAGE>
month period ended April 30, 2000 and since inception March 8, 1996 to April
30, 2000, was 25.04% and 31.72%, respectively. The average annual total return
of the Theme Fund Class A Shares for the 1-year period ended April 30, 2000 and
since inception October 16, 1995 to April 30, 2000, was 44.45% and 31.27%,
respectively. The average annual total return of the Theme Fund Class B Shares
for the 1-year period ended April 30, 2000 and since inception October 16, 1995
to April 30, 2000, was 48.03% and 31.85%, respectively. The average annual total
return of the Theme Fund Class C Shares for the 1-year period ended April 30,
2000 and since inception November 3, 1997 to April 30, 2000, was 52.09% and
41.20%, respectively.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 5.75% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each Class of shares of the
Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or sales
of portfolio securities during the fiscal year by the monthly average of the
value of the Fund's securities (excluding from the computation all securities,
including options, with maturities at the time of acquisition of one year or
less). A high rate of portfolio turnover generally involves correspondingly
greater brokerage commission expenses, which must be borne directly by the Fund.
Turnover rates may vary greatly from year to year as well as within a particular
year and may also be affected by cash requirements for redemptions of Fund
shares and by requirements which enable the Fund to receive certain favorable
tax treatment (see "Dividends, Distributions and Taxes"). Historical annual
rates of portfolio turnover for the Fund are set forth in the prospectus under
the heading "Financial Highlights."
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser and/or Subadviser (throughout this section the "Adviser") places
orders for the purchase and sale of securities, supervises their execution and
negotiates brokerage commissions on behalf of the Funds. It is the practice of
the Adviser to seek the best prices and execution of orders and to negotiate
brokerage commissions which the Adviser's opinion are reasonable in relation to
the value of the brokerage services provided by the executing broker. Brokers
who have executed orders for the Funds are asked to quote a fair commission for
their services. If the execution is satisfactory and if the requested rate
approximates rates currently being quoted by the other brokers selected by the
Adviser, the rate is deemed by the Adviser to be reasonable. Brokers may ask for
higher rates of commission if all or a portion of the securities involved in the
transaction are positioned by the broker, if the broker believes it has brought
the Funds an unusually favorable trading opportunity, or if the broker regards
its research services as being of exceptional value, and payment of such
commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to execute
trades in the future.
The Adviser believes that the Funds benefit with a securities industry
comprised of many and diverse firms and that the long-term interest of
shareholders of the Funds is best served by its brokerage policies which include
paying a fair commission rather than seeking to exploit its leverage to force
the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner; the
value of research services provided by the firm; and the firm's attitude toward
and interest in mutual funds in general, including the sale of mutual funds
managed and sponsored by the Adviser. The Adviser does not offer or promise to
any broker an amount or percentage of brokerage commissions as an inducement or
reward for the sale of shares of the Funds. Over-the-counter purchases and sales
are transacted directly with principal market-makers except in those
circumstances where in the opinion of the Adviser better prices and execution
are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments; many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other
10
<PAGE>
accounts advised by the Adviser and its affiliates and not all of this
information will be used in connection with the Trust. While this information
may be useful in varying degrees and may tend to reduce the Adviser's expenses,
it is not possible to estimate its value and in the opinion of the Adviser it
does not reduce the Adviser's expenses in a determinable amount. The extent to
which the Adviser makes use of statistical, research and other services
furnished by brokers is considered by the Adviser in the allocation of brokerage
business but there is no formula by which such business is allocated. The
Adviser does so in accordance with its judgment of the best interest of the
Trust and its shareholders.
The Trust has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Trust. No
advisory account of the Adviser is to be favored over any other account and each
account that participates in an aggregated order is expected to participate at
the average share price for all transactions of the Adviser in that security on
a given business day, with all transaction costs shared pro rata based on the
Trust's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
The Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended April 30, 1998, 1999 and 2000, brokerage commission
paid by the Trust on portfolio transactions totaled $3,579,420, $2,087,042 and
$1,225,151, respectively. In the fiscal years ended April 30, 1998, 1999 and
2000, W. S. Griffith & Co., Inc., a broker-dealer subsidiary of Phoenix Home
Life, received $0, $5,910 and $0 in fund-related commissions attributed to a
clearing arrangement with an unaffiliated broker/dealer. Brokerage commissions
of $9,195 paid during the fiscal year ended April 30, 2000, were paid on
portfolio transactions aggregating $22,117,787 executed by brokers who provided
research and other statistical information.
SERVICES OF THE ADVISERS
The investment adviser to the Fund is Phoenix Investment Counsel, Inc. ("PIC"
or "Adviser"), which is located at 56 Prospect Street, Hartford, Connecticut
06115-0480. PIC acts as the investment adviser for 14 fund companies totaling 37
mutual funds, as subadviser to two fund companies totaling three mutual funds,
and as adviser to institutional clients. PIC has acted as an investment adviser
for over sixty years. PIC was originally organized in 1932 as John P. Chase,
Inc. As of June 30, 2000, PIC had approximately $25.7 billion in assets under
management. Philip R. McLoughlin, a Trustee and officer of the Fund, is a
director of PIC. All other executive officers of the Fund are officers of PIC.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut is a majority shareholder of PXP.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut, 06115-2520. Equity Planning, a mutual fund
distributor, acts as the national distributor of the Fund's shares and as
Financial Agent of the Fund. The principal office of Equity Planning is located
at 100 Bright Meadow Boulevard, Enfield, Connecticut, 06082.
PXP is a publicly-traded independent registered investment advisory firm and
has served investors for over 70 years. As of June 30, 2000, PXP had over $60.8
billion in assets under management through its investment partners: Aberdeen
Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago
and Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Phoenix/Zweig Advisers LLC
(Zweig) in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister,
and Oakhurst divisions) in Hartford, Sarasota and Scotts Valley, CA,
respectively.
11
<PAGE>
Roger Engemann & Associates, Inc. ("Engemann") is the investment subadviser to
the Small Cap Fund and is located at 600 North Rosemead Boulevard, Pasadena,
California 91107. Engemann acts as adviser to six mutual funds, as subadviser to
four other mutual funds and acts as investment adviser to institutions and
individuals. As of December 31, 1999, Engemann had $10.9 billion in assets under
management. Engemann has been an investment adviser since 1969.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
Growth Fund and Strategic Theme Fund and is located at 909 Montgomery Street,
San Francisco, California 94133. Seneca acts as a subadviser to nine other
mutual funds and as investment adviser to institutions and individuals. As of
December 31, 1999, Seneca had $9.2 billion in assets under management. Seneca
has been (with its predecessor, GMG/Seneca Capital Management LP ("GMG/Seneca"))
an investment adviser since 1989.
The Adviser provides certain services and facilities required to carry on the
day-to-day operations of the Funds (for which it receives a management fee)
other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; legal, auditing and accounting services; regulatory
filing fees and expenses of printing the Trust's registration statement (but the
Distributor purchases such copies of the Funds' prospectuses and reports and
communications to shareholders as it may require for sales purposes); insurance
expense; association membership dues; brokerage fees; and taxes. Each Fund will
pay expenses incurred in its own operation and will also pay a portion of the
Trust's administration expenses allocated on the basis of the asset values of
the respective Fund.
As compensation for its services, PIC receives a fee from the Growth Fund,
which is accrued daily against the value of the Fund's net assets and is paid by
the Fund monthly. The fee is computed at an annual rate of .70% of the Fund's
average daily net assets of up to $1 billion, .65% of the Fund's average daily
net assets from $1 billion to $2 billion, and .60% of the Fund's average net
assets in excess of $2 billion. As compensation for its services, PIC receives a
fee from the Theme Fund and the Small Cap Fund which is accrued daily against
the value of each Fund's net assets and is paid by the Fund monthly. The fee is
computed at an annual rate of 0.75% of the average daily net asset values of
each Fund up to $1 billion; 0.70% of such value between $1 billion and $2
billion; and 0.65% of such value in excess of $2 billion. For the fiscal years
ended April 30, 1998, 1999 and 2000, the management fees paid by each of the
Funds were:
--------------------------------------------------------------------------------
1998 1999 2000
--------------------------------------------------------------------------------
SMALL CAP FUND $2,487,577 $1,885,586 $2,089,096
--------------------------------------------------------------------------------
GROWTH FUND $1,326,599 $1,352,558 $1,581,392
--------------------------------------------------------------------------------
STRATEGIC THEME FUND $1,139,421 $1,129,085 $2,319,786
--------------------------------------------------------------------------------
The Management Agreements shall continue in effect from year to year, provided
that such continuance is specifically approved annually by a majority of the
Trustees who are not interested persons of the parties thereto (as defined in
the 1940 Act) and by either (a) the Trustees or (b) vote of a majority of the
outstanding securities of the Trust (as defined in the 1940 Act).
The Management Agreements may be terminated without penalty at any time by the
Trustees or by a vote of a majority of the outstanding voting securities of the
Trust upon 60 days written notice addressed to the Adviser at its principal
place of business; and by the Adviser upon 60 days written notice addressed to
the Trust at its principal place of business. The Management Agreements will
terminate automatically in the event of their "assignment" as defined in Section
2(a)(4) of the 1940 Act.
The Trust, its Adviser and Subadvisers, and its Distributor have each adopted
a Code of Ethics pursuant to Rule 17-j1 under the Investment Company Act of
1940. Personnel subject to the Codes of Ethics may purchase and sell securities
for their personal accounts, including securities that may be purchased, sold or
held by the Funds, subject to certain restrictions and conditions. Generally,
personal securities transactions are subject to preclearance procedures,
reporting requirements and holding period rules. The Codes also restrict
personal securities transactions in private placements, initial public offerings
and securities in which the Funds have a pending order.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Funds do not price securities on
weekends or United States national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Funds. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a Class, plus that Class's
distribution fee and any other expenses allocated solely to that Class, are
deducted from the proportionate interest of such Class in the assets of the
12
<PAGE>
Fund, and the resulting amount of each is divided by the number of shares of
that Class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. The minimum initial investment for Class
X Shares is $250,000, and the minimum subsequent investment for Class X Shares
is $10,000. Completed applications for the purchase of shares should be mailed
to: Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). The Growth Fund also offers one class of shares
(Class X Shares) that may be purchased by certain institutional investors at a
price equal to their net asset value per share.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in a Fund, the accumulated continuing
distribution and services fees and contingent deferred sales charges on Class B
or Class C Shares would be less than the initial sales charge and accumulated
distribution services fee on Class A Shares purchased at the same time. NOTE,
ONLY THE GROWTH FUND AND THEME FUND OFFER CLASS C SHARES AND ONLY THE GROWTH
FUND OFFERS CLASS X SHARES.
Dividends paid by the Funds, if any, with respect to each class of shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and services fees and any incremental
transfer agency costs relating to each class of shares will be borne exclusively
by that class. See "Dividends, Distributions and Taxes."
CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to ongoing distribution and service fees at an annual rate of
up to 0.25% of the Funds' aggregate average daily net assets attributable to the
Class A Shares. In addition, certain purchases of Class A Shares qualify for
reduced initial sales charges.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B Shares are subject to ongoing distribution and service fees at an
aggregate annual rate of up to 1.00% of the Funds' aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid,
13
<PAGE>
than those related to Class A Shares. Class B Shares will automatically
convert to Class A Shares eight years after the end of the calendar month in
which the shareholder's order to purchase was accepted. The purpose of the
conversion feature is to relieve the holders of the Class B Shares that have
been outstanding for a period of time sufficient for the adviser and the
Distributor to have been compensated for distribution expenses related to the
Class B Shares from most of the burden of such distribution related expenses.
Class B Shares include all shares purchased, pursuant to the deferred sales
charge alternative, which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and service fees. Such
conversion will be on the basis of the relative net asset value of the two
Classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
subaccount. Each time any Class B Shares in the shareholder's Fund account
(other than those in the subaccount) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the subaccount will also convert to
Class A Shares.
CLASS C SHARES (GROWTH FUND AND THEME FUND ONLY)
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. The deferred
sales charge may be waived in connection with certain qualifying redemptions.
Shares issued in conjunction with the automatic reinvestment of income
distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to an ongoing distribution and services fee
at an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares.
CLASS X SHARES (GROWTH FUND ONLY)
Class X Shares are offered without any sales charges to institutional
investors, such as pension and profit sharing plans, other employee benefit
trusts, investment advisers, endowments, foundations and corporations, and
others who purchase the minimum amounts.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (an "Affiliated
Phoenix Fund"); (2) any director or officer, or any full-time employee or sales
representative (for at least 90 days) of the Adviser or Distributor; (3)
registered representatives and employees of securities dealers with whom
Distributor has sales agreements; (4) any qualified retirement plan exclusively
for persons described above; (5) any officer, director or employee of a
corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund or any other Affiliated Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third party administrator, registered investment adviser, Fund
company, or bank Fund department which exercises discretionary authority and
holds the account in a fiduciary, agency, custodial or similar capacity, if in
the aggregate such accounts held by such entity equal or exceed $1,000,000; (15)
any person who is investing redemption proceeds from investment companies other
than the Phoenix Funds or any other Affiliated Phoenix Fund if, in connection
with the purchases or redemption of the redeemed shares, the investor paid a
prior sales charge provided such investor supplies verification that the
redemption occurred within 90 days of the Phoenix Fund purchase and that a sales
charge was paid; (16) any deferred compensation plan established for the benefit
of any Phoenix Fund or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (16) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A Shares bought through investment advisers and
financial planners who charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their clients;
(18) retirement plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made through
a broker or agent or other financial
14
<PAGE>
intermediary that has made special arrangements with the Distributor for such
purchases; (19) 401(k) participants in the Merrill Lynch Daily K Plan (the
"Plan") if the Plan has at least $3 million in assets or 500 or more eligible
employees; (20) clients of investment advisors or financial planners who buy
shares for their own accounts but only if their accounts are linked to a master
account of their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which the
Distributor has made such special arrangements. Each of the investors described
in (17) through (20) may be charged a fee by the broker, agent or financial
intermediary for purchasing shares.
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix-Goodwin Money Market
Fund and Phoenix-Zweig Government Cash Fund Class A Shares), if made at the same
time by the same "person," will be added together to determine whether the
combined sum entitles you to an immediate reduction in sales charges. A "person"
is defined in this and the following sections as (a) any individual, their
spouse and minor children purchasing shares for his or their own account
(including an IRA account) including his or their own trust; (b) a trustee or
other fiduciary purchasing for a single trust, estate or single fiduciary
account (even though more than one beneficiary may exist); (c) multiple employer
trusts or Section 403(b) plans for the same employer; (d) multiple accounts (up
to 200) under a qualified employee benefit plan or administered by a third party
administrator; or (e) trust companies, bank trust departments, registered
investment advisers, and similar entities placing orders or providing
administrative services with respect to funds over which they exercise
discretionary investment authority and which are held in a fiduciary, agency,
custodial or similar capacity, provided all shares are held of record in the
name, or nominee name, of the entity placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised, subadvised
or distributed by the Adviser or Distributor or any corporate affiliate of
either or both the Adviser and Distributor provided such other mutual fund
extends reciprocal privileges to shareholders of the Phoenix Fund.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any class
of shares of this or any other Affiliated Phoenix Fund (other than
Phoenix-Goodwin Money Market Fund and Phoenix-Zweig Government Cash Fund Class A
Shares), if made by the same person within a 13-month period, will be added
together to determine whether you are entitled to an immediate reduction in
sales charges. Sales charges are reduced based on the overall amount you
indicate that you will buy under the Letter of Intent. The Letter of Intent is a
mutually non-binding arrangement between you and the Distributor. Since the
Distributor doesn't know whether you will ultimately fulfill the Letter of
Intent, shares worth 5% of the amount of each purchase will be set aside until
you fulfill the Letter of Intent. When you buy enough shares to fulfill the
Letter of Intent, these shares will no longer be restricted. If, on the other
hand, you do not satisfy the Letter of Intent, or otherwise wish to sell any
restricted shares, you will be given the choice of either buying enough shares
to fulfill the Letter of Intent or paying the difference between any sales
charge you previously paid and the otherwise applicable sales charge based on
the intended aggregate purchases described in the Letter of Intent. You will be
given 20 days to make this decision. If you do not exercise either election, the
Distributor will automatically redeem the number of your restricted shares
needed to make up the deficiency in sales charges received. The Distributor will
redeem restricted Class A Shares before Class C or B Shares, respectively.
Oldest shares will be redeemed before selling newer shares. Any remaining shares
will then be deposited to your account.
RIGHT OF ACCUMULATION. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be added
together to determine whether the combined sum entitles you to a prospective
reduction in sales charges. You must provide certain account information to the
Distributor to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
CLASS B AND CLASS C SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program. If,
as described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's
15
<PAGE>
estate, the CDSC will be waived on any redemption from the estate account
occurring within one year of the death. If the Class B Shares are not redeemed
within one year of the death, they will remain subject to the applicable CDSC.
CONVERSION FEATURES--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are purchased. Conversion will be on the basis
of the then-prevailing net asset value of Class A and B Shares. There is no
sales load, fee or other charge for this feature. Class B Shares acquired
through dividend or distribution reinvestments will be converted into Class A
Shares at the same time that other Class B Shares are converted based on the
proportion that the reinvested shares bear to purchased Class B Shares. The
conversion feature is subject to the continuing availability of an opinion of
counsel or a ruling of the Internal Revenue Service that the assessment of the
higher distribution fees and associated costs with respect to Class B Shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Code, and that the conversion of shares does not constitute
a taxable event under federal income tax law. If the conversion feature is
suspended, Class B Shares would continue to be subject to the higher
distribution fee for an indefinite period. Even if the Fund was unable to obtain
such assurances, it might continue to make distributions if doing so would
assist in complying with its general practice of distributing sufficient income
to reduce or eliminate federal taxes otherwise payable by the Fund.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restrictions and limit information.
EXCHANGES
Under certain circumstances, shares of any Affiliated Phoenix Fund may be
exchanged for shares of the same Class of another Affiliated Phoenix Fund on the
basis of the relative net asset values per share at the time of the exchange.
Exchanges are subject to the minimum initial investment requirement of the
designated Fund or Series, except if made in connection with the Systematic
Exchange privilege. Shareholders may exchange shares held in book-entry form for
an equivalent number (value) of the same Class of shares of any other Affiliated
Phoenix Fund, if currently offered. Exchanges will be based upon each fund's net
asset value per share next computed after the close of business, without sales
charge. On exchanges with share classes that carry a contingent deferred sales
charge, the CDSC schedule of the original shares purchased continues to apply.
The exchange of shares is treated as a sale and purchase for federal income tax
purposes (see Phoenix Funds, also "Dividends, Distributions and Taxes").
Exchange privileges may not be available for all funds, and may be rejected or
suspended.
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same Class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semiannual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same Class
of another Affiliated Phoenix Fund. This requirement does not apply to Phoenix
"Self Security" program participants. Systematic exchanges will be executed upon
the close of business on the 10th day of each month or the next succeeding
business day. Systematic exchange forms are available from the Distributor.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with respect to shares in that account be automatically
reinvested in a single account of one of the other Affiliated Phoenix Funds at
net asset value. You should obtain a current prospectus and consider the
objectives and policies of each fund carefully before directing dividends and
distributions to another fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate payee
must be made in writing with a signature guarantee of the registered owner(s).
To be effective with respect to a particular dividend or distribution,
notification of the new distribution option must be received by the Transfer
Agent at least three days prior to the record date of such dividend or
distribution. If all shares in your account are repurchased or redeemed or
transferred between the record date and the payment date of a dividend or
distribution, you will receive cash for the dividend or distribution regardless
of the distribution option selected.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a
16
<PAGE>
request for monies to the shareholder's commercial bank, savings bank or
credit union via Automated Clearing House (ACH). The shareholder's bank, which
must be an ACH member, will in turn forward the monies to Equity Planning for
credit to the shareholder's account. ACH is a computer based clearing and
settlement operation established for the exchange of electronic transactions
among participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone service
until the Fund has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days. The Fund and Equity
Planning reserve the right to modify or terminate the Invest-by-Phone service
for any reason or to institute charges for maintaining an Invest-by-Phone
account.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to periodically redeem a portion
of your account on a predetermined monthly, quarterly, semiannual or annual
basis. A sufficient number of full and fractional shares will be redeemed so
that the designated payment is made on or about the 20th day of the month.
Shares are tendered for redemption by the Transfer Agent, as agent for the
shareowner, on or about the 15th of the month at the closing net asset value on
the date of redemption. The Systematic Withdrawal Program also provides for
redemptions to be tendered on or about the 10th, 15th or 25th of the month with
proceeds to be directed through Automated Clearing House (ACH) to your bank
account. In addition to the limitations stated below, withdrawals may not be
less than $25 and minimum account balance requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be paid
by the investor on the purchase of Class A Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A Shares may not
participate in an automatic investment program while participating in the
Systematic Withdrawal Program.
Through the Program, Class B and Class C shareholders may withdraw up to 1% of
their aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B and Class C shareholders redeeming more shares
than the percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed. Accordingly,
the purchase of Class B or Class C Shares will generally not be suitable for an
investor who anticipates withdrawing sums in excess of the above limits shortly
after purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Trust to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more after
receipt of the check.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/dealer. The Fund has no specific procedures
governing such account transfers.
17
<PAGE>
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at least
one year and has a value of less than $200 may be redeemed upon the giving of
not less than 30 days written notice to the shareholder mailed to the address of
record. During the 60 day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Funds' current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when he sold the securities.
ACCOUNT REINSTATEMENT PRIVILEGE
Shareholders who may have overlooked features of their investment at the time
they redeemed have a privilege of reinvestment of their investment at net asset
value. See the Funds' current Prospectus for more information and conditions
attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provisions of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things, derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities. If in any taxable year a Fund does not
qualify as a regulated investment company, all of its taxable income will be
taxed to the Fund at corporate rates.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of the Fund's net capital gains
for the 12-month period ending on October 31 of such calendar year. In addition,
an amount equal to any undistributed investment company taxable income or
capital gain net income from the previous calendar year must also be distributed
to avoid the excise tax. The excise tax is imposed on the amount by which the
regulated investment company does not meet the foregoing distribution
requirements. If a Fund has taxable income that would be subject to the excise
tax, the Fund intends to distribute such income so as to avoid payment of the
excise tax.
Under another provision of the Code, any dividend declared by the Funds to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by a Fund
before February 1 of the following year.
The Funds' policy is to distribute to its shareholders all or substantially
all investment company taxable income as defined in the Code and any net
realized capital gains for each year and consistent therewith to meet the
distribution requirements of Part I of subchapter M of the Code. Each Fund
intends to meet the other requirements of Part I of subchapter M, including the
requirements with respect to diversification of assets and sources of income, so
that each Fund will pay no taxes on net investment income and net realized
capital gains distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares of
a Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of a Fund are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a
18
<PAGE>
sales charge or at a reduced sales charge. In that case, the gain or loss
realized on the disposition will be determined by excluding from the tax basis
of the shares disposed of all or a portion of the sales charge incurred in
acquiring those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by a Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by a Fund
during a taxable year or held by a Fund at the close of its taxable year, will
be treated as if sold for their market value, with 40% of any resulting gain or
loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger amounts
of short-term gains, which are taxable to shareholders as ordinary income.
IMPORTANT NOTICE REGARDING TAXPAYER IRS CERTIFICATION
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of all
reportable payments including any taxable dividends, capital gains distributions
or share redemption proceeds, for an account which does not have a taxpayer
identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for any
person failing to provide a taxpayer identification number along with the
required certifications.
Each Fund will furnish its shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns.
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to federal, foreign, state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further information
about the plans.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan (the
"Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and, on
the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
19
<PAGE>
THE DISTRIBUTOR
Phoenix Equity Planning Corporation (the "Equity Planning" or "Distributor"),
an indirect, less than wholly-owned subsidiary of Phoenix Home Life and an
affiliate of PIC, serves as Distributor for the Funds. The address of the
Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut
06083-2200. The Distributor conducts a continuous offering pursuant to a "best
efforts" arrangement requiring the Distributor to take and pay for only such
securities as may be sold to the public. During the fiscal years 1998, 1999 and
2000, purchasers of Fund shares paid aggregate sales charges of $2,025,485,
$1,723,056 and $1,137,546, respectively, of which the Distributor for the Funds
received net commissions of $1,058,952, $1,279,374 and $552,688, respectively,
for its services, the balance being paid to dealers. For the fiscal year ended
April 30, 2000, the Distributor received net commissions of $71,696 for Class A
Shares and deferred sales charges of $480,992 for Class B and Class C Shares.
The Underwriting Agreement may be terminated at any time on not more than 60
days written notice, without payment of a penalty, by the Distributor, by vote
of a majority of the outstanding voting securities of the Trust, or by vote of a
majority of the Trustees who are not "interested persons" of the Trust and who
have no direct or indirect financial interest in the operation of the
Distribution Plans or in any related agreements. The Underwriting Agreement will
terminate automatically in the event of its assignment.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75 4.99 4.25
$100,000 but under $250,000 3.75 3.90 3.25
$250,000 but under $500,000 2.75 2.83 2.25
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Fund and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Fund
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time, pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under $3 million, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment, including investments by qualified employee benefit plans, is
subsequently redeemed within one year of the investment date, the broker/dealer
will refund to the Distributor such amounts paid with respect to the investment.
In addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. From its own profits
and resources, the Distributor intends to pay the following additional
compensation to Merrill Lynch, Pierce, Fenner & Smith, Inc.: 0.25% on sales of
Class A and B shares, 0.10% on sales of Class C shares, 0.10% on sales of Class
A shares sold at net asset value, and 0.10% annually on the average daily net
asset value of fund shares on which Merrill Lynch is
20
<PAGE>
broker of record and which such shares exceed the amount of assets on which
Merrill Lynch is broker of record as of July 1, 1999. Any dealer who receives
more than 90% of a sales charge may be deemed to be an "underwriter" under the
Securities Act of 1933. Equity Planning reserves the right to discontinue or
alter such fee payment plans at any time.
From its own resources or pursuant to the Distribution Plans, and subject to
the dealers' prior approval, the Distributor may provide additional compensation
to registered representatives of dealers in the form of travel expenses, meals,
and lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on Class A shares which it normally
retains to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings.
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
services as financial agent, Equity Planning will be paid a fee equal to the sum
of (1) the documented cost of fund accounting and related services provided by
PFPC, Inc., as subagent, to the financial agent, plus (2) the documented cost of
the financial agent to provide financial reporting and tax services and
oversight of the subagent's performance. The current fee schedule of PFPC, Inc.
is based upon the average of the aggregate daily net asset values of each Fund,
at the following incremental annual rates:
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as financial agent. PFPC,
Inc. agreed to a modified fee structure and waived certain charges. Because
PFPC, Inc.'s arrangement would have favored smaller funds over larger funds,
Equity Planning reallocates PFPC, Inc.'s overall asset-based charges among all
funds for which it serves as financial agent on the basis of the relative net
assets of each fund. As a result, the PFPC, Inc. charges to the Funds are
expected to be slightly less than the amount that would be found through direct
application of the table illustrated above. For its services during the Trust's
fiscal year ended April 30, 2000, Equity Planning received $694,629.
DISTRIBUTION PLANS
The Trust has adopted a distribution plan for each class of shares (i.e., a
plan for the Class A Shares, a plan for the Class B Shares, and a plan for the
Class C Shares; collectively, the "Plans") in accordance with Rule 12b-1 under
the Act, to compensate the Distributor for the services it provides and for the
expenses it bears under the Underwriting Agreement. Each class of shares pays a
service fee at a rate of 0.25% per annum of the average daily net assets of such
class of the Fund and a distribution fee based on average daily net assets at
the following rates: for Class B Shares at a rate of 0.75% per annum; for Class
C Shares at a rate of 0.75% per annum.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor. The Distributor also pays to dealers as additional compensation
with respect to Class C Shares, 0.75% of the average annual net asset value of
that class.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Funds' shareholders; or services providing the Funds with
more efficient methods of offering shares to coherent groups of clients, members
or prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing.
21
<PAGE>
On a quarterly basis, the Trustees review a report on expenditures under the
Plans and the purposes for which expenditures were made. The Trustees conduct an
additional, more extensive review annually in determining whether the Plans will
be continued. By its terms, continuation of the Plans from year to year is
contingent on annual approval by a majority of the Trustees and by a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of the Plans
or any related agreements (the "Plan Trustees"). The Plans provide that they may
not be amended to increase materially the costs which the Funds may bear
pursuant to the Plans without approval of the shareholders of the Funds and that
other material amendments to the Plans must be approved by a majority of the
Plan Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plans further provide that while they are in
effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." The Plans may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the outstanding shares of the
relevant Class of the Trust.
For the fiscal year ended April 30, 2000, the Funds paid Rule 12b-1 Fees in
the amount of $3,757,065, of which the principal underwriter received
$2,074,317, W.S. Griffith & Co., Inc., an affiliate, received $177,556 and
unaffiliated broker-dealers received $1,505,192. 12b-1 Fees paid by the Funds
during last fiscal year were spent on: (1) advertising, $540,445; (2) printing
and mailing of prospectuses to other than current shareholders, $19,042; (3)
compensation to dealers, $2,398,839; (4) compensation to sales personnel,
$1,264,048; (5) service costs, $176,042 and (6) other, $250,746.
No interested person of the Fund and no Trustee who is not an interested
person of the Fund, as that term is defined in the Investment Company Act of
1940, had any direct or indirect financial interest in the operation of the
Plans.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
MANAGEMENT OF THE TRUST
The Trust is an open-end management investment company known as a mutual fund.
The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform duties imposed on Trustees by the
Investment Company Act and Delaware business trust law.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust and their business affiliations for the
past five years are set forth below and, unless otherwise noted, the address of
each executive officer and Trustee is 56 Prospect Street, Hartford, Connecticut,
06115-0480.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (66) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Wethersfield, CT 06109 Institutional Mutual Funds (1996-present) and Phoenix-Seneca Funds
(2000-present).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
E. Virgil Conway (71) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present). Chairman, (1998-present), Accuhealth Trism, Inc.
(1994-present), Realty Foundation of New York (1972-present), and New
York Housing Partnership Development Corp. (1985-present). Vice
Chairman Academy of Political Science (1985-present).
Director/Trustee, Phoenix Funds (1993-present). Trustee,
Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-present).
Chairman/Member, Audit Committee of the City of New York (1981-1996).
Advisory Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996) and Fund Directions (1993-1998). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
Harry Dalzell-Payne (71) Trustee Director/Trustee, Phoenix Funds (1993-present). Trustee,
The Flat Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Elmore Court Mutual Funds (1996-present) and Phoenix-Seneca Funds (1999-present).
Elmore, GLOS GL2 6NT, UK Director, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-present). Formerly
a Major General of the British Army.
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Apt. 902 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Naples, FL 34108 Director, Duff & Phelps Utilities Income Inc. (1987-present), Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-present).
Director (1989-1997), Chairman of the Board (1993-1997), President
(1989-1993), and Chief Executive Officer (1989-1995), Phoenix
Investment Partners, Ltd.
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer (1995-1999),
Chairman Carson Products Company. (1995-present). Director/Trustee, Phoenix
Carson Products Company Funds (1980-present). Trustee, Phoenix-Aberdeen Series Fund, Phoenix
64 Ross Road Duff & Phelps Institutional Mutual Funds (1996-present) and
Savannah, GA 30750 Phoenix-Seneca Funds (2000-present). Director, Equifax Corp.
(1991-present) and Evergreen International Fund, Inc. (1989-present).
Trustee, Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free Trust, and Master
Reserves Trust.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
*Philip R. McLoughlin (53) Trustee and Chairman (1997-present), Director (1995-present), Vice Chairman
President (1995-1997) and Chief Executive Officer (1995-present), Phoenix
Investment Partners, Ltd. Director (1994-present) and Executive Vice
President, Investments (1988-present), Phoenix Home Life Mutual
Insurance Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen Series Fund
and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. (1995-present)
and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Trustee, Phoenix-Seneca Funds (1999-present).
Director (1983-present) and Chairman (1995-present), Phoenix
Investment Counsel, Inc. Director (1984-present) and President
(1990-1999), Phoenix Equity Planning Corporation. Chairman and Chief
Executive Officer, Phoenix/Zweig Advisers LLC (1999-present).
Director, PXRE Corporation (Delaware) (1985-present) and World Trust
Fund (1991-present). Director and Executive Vice President, Phoenix
Life and Annuity Company (1996-present). Director and Executive Vice
President, PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director (1992-present)
and President (1992-1994), W.S. Griffith & Co., Inc. Director, PHL
Associates, Inc. (1995-present).
Everett L. Morris (72) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. (1991-present)
and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present).
*James M. Oates (54) Trustee Chairman, IBEX Capital Markets, Inc. (formerly, IBEX Capital Markets
Managing Director LLC) (1997-present). Managing Director, Wydown Group (1994-present).
The Wydown Group Director, Phoenix Investment Partners, Ltd. (1995-present).
IBEX Capital Markets, Inc. Director/Trustee, Phoenix Funds (1987-present). Trustee,
60 State Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Suite 950 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Boston, MA 02109 Director, AIB Govett Funds (1991-present), Investors Financial
Service Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-present),
Stifel Financial (1996-present), Command Systems, Inc.
(1998-present), Connecticut River Bancorp (1998-present) and
Endowment for Health (1999-present). Vice Chairman, Massachusetts
Housing-Partnership (1998-2000). Director, Blue Cross and Blue Shield
of New Hampshire (1994-1999).
Herbert Roth, Jr. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
P.O. Box 909 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Sherborn, MA 01770 Director, Boston Edison Company (1978-present), Landauer, Inc.
(medical services) (1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries (diversified
manufacturer) (1985-present). Member, Directors Advisory Council,
Phoenix Home Life Mutual Insurance Company (1998-present). Director,
Phoenix Home Life Mutual Insurance Company (1972-1998).
24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Managing Director, Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (69) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Greenwich, CT 06830 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, UST Inc. (1995-present), HPSC Inc. (1995-present),
Burroughs Wellcome Fund (1996-present) and Compuware (1996-present).
Visiting Professor, University of Virginia (1997-present). Director,
Duty Free International, Inc. (1997). Chairman, Dresing, Lierman,
Weicker (1995-1996). Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (42) Executive Director and Executive Vice President, Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Director (1994-present),
President President (1995-present), Executive Vice President (1994-1995), Vice
President (1991-1994), Phoenix Investment Counsel, Inc. Director,
Phoenix Equity Planning Corporation (1995-present). Executive Vice
President, Phoenix Funds (1993-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix-Seneca Funds (2000-present). Executive
Vice President (1997-present), Vice President (1996-1997), Phoenix
Duff & Phelps Institutional Mutual Funds. Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995).
John F. Sharry (48) Executive President, Retail Division (1999-present), Executive Vice President,
Vice Retail Division (1997-1999), Phoenix Investment Partners, Ltd.
President Managing Director, Retail Distribution, Phoenix Equity Planning
Corporation (1995-present). Executive Vice President, Phoenix Funds
(1998-present), Phoenix-Aberdeen Series Fund (1998-present) and
Phoenix-Seneca Funds (2000-present). Managing Director, Director and
National Sales Manager, Putnam Mutual Funds (1992-1995).
J. Roger Engemann (59) Senior President and Director, Roger Engemann & Associates, Inc.
600 Rosemead Blvd. Vice President (1969-present). President and Director, Pasadena Capital Corporation
Pasadena, CA 91107-2138 (1988-present). Chairman, President and Trustee, Phoenix-Engemann
Funds (1986-present). President and Director, Roger Engemann
Management Co., Inc. (1985-present). Managing Director, Equities,
Phoenix Investment Counsel, Inc. (1998-present). Senior Vice
President, The Phoenix Edge Series Fund and Phoenix Series Fund
(1998-present).
Gail P. Seneca (47) Senior Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. President (1998-present). President (1996-present) and Trustee (1996-2000),
San Francisco, CA 94133 Phoenix-Seneca Funds. President, Chief Executive and Investment
Officer, Seneca Capital Management LLC (1996-present). Chief
Investment Officer and managing general partner (1989-present),
GMG/Seneca Capital Management, L.P. Senior Vice President, The Phoenix
Edge Series Fund (1998-present), Phoenix Multi-Portfolio Fund
(1998-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Robert S. Dreissen (52) Vice President and Vice President and Compliance Officer, Phoenix Investment Partners,
Assistant Secretary Ltd. (1999-present) and Phoenix Investment Counsel, Inc.
(1999-present). Vice President, Phoenix Funds, Phoenix-Aberdeen
Series Fund, Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present) and Phoenix-Seneca Funds (2000-present). Compliance
Officer (2000-present) and Associate Compliance Officer (1999), PXP
Securities Corporation. Vice President, Risk Management Liaison, Bank
of America (1996-1999). Vice President, Securities Compliance, The
Prudential Insurance Company of America (1993-1996). Branch
Chief/Financial Analyst, Securities and Exchange Commission, Division
of Investment Management (1972-1993).
Ronald K. Jacks (35) Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. (1998-present). Secretary (1996-present) and Trustee (1996-1997),
San Francisco, CA 94133 Phoenix-Seneca Funds. Portfolio Manager, Seneca Capital Management
LLC (1996-present). Portfolio Manager, GMG/Seneca Capital Management,
L.P. (1990-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Multi-Portfolio Fund (1998-present) and
Phoenix Duff & Phelps Institutional Mutual Funds (1999-present).
Richard D. Little (51) Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. (1998-present). Vice President, Phoenix-Seneca Funds (1996-present).
San Francisco, CA 94133 General Partner and Director of Equities, GMG/Seneca Capital
Management, L.P. (1989-present). Director of Equities, Seneca Capital
Management LLC (1996-present). Vice President, The Phoenix Edge
Series Fund (1998-present), Phoenix Multi-Portfolio Fund
(1998-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present).
James E. Mair (58) Vice President Executive Vice President (1994-present), Senior Vice President
600 Rosemead Blvd. (1983-1994), Roger Engemann & Associates, Inc. Director
Pasadena, CA 91107-2138 (1990-present), Executive Vice President (1994-present), Senior Vice
President (1990-1994), Pasadena Capital Corporation. Director,
Pasadena National Trust (1989-present). Executive Vice President
(1994-present), Security Analyst (1983-1994), Roger Engemann
Management Co., Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Vice President, The Phoenix Edge Series
Fund and Phoenix Series Fund (1998-present).
William R. Moyer (55) Vice Executive Vice President and Chief Financial Officer (1999-present),
100 Bright Meadow Blvd. President Senior Vice President and Chief Financial Officer (1995-1999),
P.O. Box 2200 Phoenix Investment Partners, Ltd. (1995-present). Senior Vice
Enfield, CT 06083-2200 President (1990-present), Chief Financial Officer (1996-present),
Finance (until 1996), and Treasurer (1998-present and 1994-1996),
Phoenix Equity Planning Corporation. Director (1998-present), Senior
Vice President (1990-present), Chief Financial Officer (1996-present)
and Treasurer (1994-present), Phoenix Investment Counsel, Inc.
Treasurer (1999-present), Vice President and Chief Financial Officer,
Duff & Phelps Investment Management Co. (1996-1999). Vice President,
Phoenix Funds (1990-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix Aberdeen Series Fund
(1996-present). Executive Vice President, Phoenix-Seneca Funds
(2000-present). Vice President, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995). Senior Vice
President, Chief Financial Officer, W.S. Griffith & Co., Inc.
(1992-1995) and Townsend Financial Advisers, Inc. (1993-1995).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
John S. Tilson (56) Vice President Executive Vice President (1994-present), Senior Vice President
600 Rosemead Blvd. (1983-1994), Roger Engemann & Associates, Inc. Director (1990-present),
Pasadena, CA 91107-2138 Executive Vice President (1994-present), Senior Vice President
(1990-1994), Pasadena Capital Corporation. Chief Financial Officer and
Secretary, Phoenix-Engemann Funds (1988-present). Executive Vice
President (1994-present), Security Analyst (1983-1994), Roger Engemann
Management Co., Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Vice President, The Phoenix Edge Series
Fund and Phoenix Series Fund (1998-present).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual Insurance
101 Munson Street Co. (1993-present). Vice President, Transfer Agent Operations
Greenfield, MA 01301 (1993-1996), Senior Vice President (1999-present), Vice President
(1996-1999), Mutual Fund Customer Service, Phoenix Equity Planning
Corporation. Secretary/Clerk, Phoenix Funds (1993-present), Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present),
Phoenix-Aberdeen Series Fund (1996-present) and Phoenix-Seneca Funds
(2000-present). Vice President, Home Life of New York Insurance
Company (1984-1992).
Nancy G. Curtiss (47) Treasurer Treasurer, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), Phoenix-Aberdeen Series
Fund (1996-present) and Phoenix-Seneca Funds (2000-present). Vice
President, Fund Accounting (1994-2000) and Treasurer (1996-2000),
Phoenix Equity Planning Corporation. Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
</TABLE>
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Trust for the fiscal year ended April 30, 2000,
the Trustees received aggregate remuneration of $44,963. For services on the
Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is not a
full-time employee of the Adviser or any of its affiliates currently receives a
retainer at the annual rate of $40,000 and a fee of $2,500 per joint meeting of
the Boards. Each Trustee who serves on the Audit Committee receives a retainer
at the annual rate of $2,000 and a fee of $2,000 per joint Audit Committee
meeting attended. Each Trustee who serves on the Nominating Committee receives a
retainer at the annual rate of $1,000 and a fee of $1,000 per joint Nominating
Committee meeting attended. Each Trustee who serves on the Executive Committee
and who is not an interested person of the Fund receives a retainer at the
annual rate of $2,000 and $2,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Costs are allocated equally to each of the Series and Funds within the Fund
complex. The foregoing fees do not include the reimbursement of expenses
incurred in connection with meeting attendance. Officers and employees of the
Advisers who are interested persons are compensated by the Adviser and receive
no compensation from the Trust.
27
<PAGE>
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM TRUST AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED FUND COMPLEX
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS (37 FUNDS)
NAME FROM TRUST OF TRUST EXPENSES UPON RETIREMENT PAID TO TRUSTEES
---- ---------- ----------------- --------------- ------------------
<S> <C> <C> <C> <C>
Robert Chesek $4,350 $60,000
E. Virgil Conway+ $5,360 $75,250
Harry Dalzell-Payne+ $5,010 $89,250
Francis E. Jeffries $4,175* $58,000
Leroy Keith, Jr. $4,350 None None $60,500
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $3,785* Trustee Trustee $51,500
James M. Oates+ $4,560 $64,250
Herbert Roth, Jr. + $3,598 $48,500
Richard E. Segerson $4,975* $69,000
Lowell Weicker, Jr. $4,800 $65,750
</TABLE>
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At June 30, 2000, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Jeffries, Morris, Roth and
Segerson was $472,348.25, $197,344.74, $177,329.63 and $115,043.51,
respectively. At present, by agreement among the Trust, the Distributor and the
electing director, director fees that are deferred are paid by the Trust to the
Distributor. The liability for the deferred compensation obligation appears only
as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On August 2, 2000, the Trustees and officers of the Fund beneficially owned
less than 1% of the outstanding shares of the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of August 2, 2000 with respect
to each person who owns of record or is known by the Trust to own of record or
beneficially owns 5% or more of any Class of the Trust's equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS NUMBER OF SHARES PERCENT OF CLASS
------------------- -------------- ---------------- -----------------
<S> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Small Cap Class B 547,693.026 11.32%
For the Sole Benefit of its Customers Growth Fund Class B 91,035.662 11.91%
Attn: Fund Administration Growth Fund Class C 49,993.415 8.87%
4800 Deer Lake Dr. E. 3rd Fl Strategic Theme Class B 570,411.676 7.81%
Jacksonville, FL 32246-6484
Judy C. Swanson TTEE Growth Fund Class X 151,495.018 8.43%
Robert A. Swanson Charitable
Remainder Trust
C/O K&E Management Ltd.
400 S. El Camino Real Ste. 1289
San Mateo, CA 94402-1704
Charles Schwab & Co. Inc. Growth Fund Class X 118,179.953 6.58%
Reinvestment Account
Attn: Mutual Fund Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
Judy C. Swanson TTEE Growth Fund Class X 96,555.236 5.38%
Robert & Judy Swanson 1993
Annuity Trust
C/O K&E Management Ltd.
400 S. El Camino Real Ste. 1289
San Mateo, CA 94402-1704
</TABLE>
28
<PAGE>
ADDITIONAL INFORMATION
CAPITAL STOCK
The Trust was originally organized under Massachusetts law in 1986 as a
business trust. On August 29, 1986, the Trust purchased all of the assets and
assumed all of the liabilities of the Stock Series of National Securities Funds.
National Securities Funds, as such, had been in existence since 1940. The Trust
continued the business of the Stock Series under the name "National Stock Fund."
The Trustees subsequently voted to change the name of the Trust to "Phoenix
Equity Opportunities Fund" to reflect the purchase of the Adviser by Phoenix
Home Life and the affiliation with other Phoenix Funds. On May 24, 1995, the
Trustees again changed the name of the Trust to "Phoenix Strategic Equity Series
Fund." Prior to May 12, 2000, the Growth Fund was known as Phoenix-Seneca Equity
Opportunities Fund, and from August 27, 1999 to May 12, 2000, it was known as
Phoenix Equity Opportunities Fund. Prior to August 27, 1999, the Small Cap Fund
was known as the Phoenix Small Cap Fund and the Strategic Theme Fund was known
as Phoenix Strategic Theme Fund. The fund was reorganized as a Delaware business
trust in August 2000.
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
Funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund. Shareholders of all Funds vote on the
election of Trustees. On matters affecting an individual Fund (such as approval
of an investment advisory agreement or a change in fundamental investment
policies) and on matters affecting an individual class (such as approval of
matters relating to a Plan of Distribution for a particular class of shares), a
separate vote of that Fund or Class is required. The Trust does not hold regular
meetings of shareholders. The Trustees will call a meeting when at least 10% of
the outstanding shares so request in writing. If the Trustees fail to call a
meeting after being so notified, the Shareholders may call the meeting. The
Trustees will assist the Shareholders by identifying other shareholders or
mailing communications, as required under Section 16(c) of the 1940 Act.
Shares are fully paid, nonassessable, redeemable and fully transferable when
they are issued. Shares do not have cumulative voting rights, preemptive rights
or subscription rights. The assets received by the Trust for the issue or sale
of shares of each Fund, and any class thereof and all income, earnings, profits
and proceeds thereof, are allocated to such Fund, and class, respectively,
subject only to the rights of creditors, and constitute the underlying assets of
such Fund or class. The underlying assets of each Fund are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such Fund and with a share of the general expenses of the Trust. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund or class will be allocated by or under the direction of the
Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust. The Declaration of Trust provides for indemnification
out of the Trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability, which
is considered remote, is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
FINANCIAL STATEMENTS
The Financial Statements for the Small Cap Fund and Theme Fund for the fiscal
year ended April 30, 2000 appearing in the Trust's 2000 Annual Report to
Shareholders are incorporated herein by reference. The Financial Statements for
the Growth Fund for the seven-month period ended April 30, 2000 appearing in the
Phoenix-Seneca Growth Funds' 2000 Annual Report to Shareholders are incorporated
herein by reference.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on April 30th. The Trust will send
financial statements to its shareholders at least semi-annually. An annual
report, containing financial statements, audited by independent accountants,
will be sent to shareholders each year, and is available without charge upon
request.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, serves as
independent accountants for the Trust (the "Accountants"). The Accountants audit
the annual financial statements and express their opinion on them.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
MA 02101, serves as custodian of the Trust's assets (the "Custodian") and Equity
Planning acts as Transfer Agent for the Trust (the "Transfer Agent"). As
compensation, Equity Planning receives a fee equivalent to $17.95 for each
designated shareholder account plus out-of-pocket expenses. Transfer Agent fees
are also utilized to offset costs and fees paid to subtransfer agents employed
by Equity Planning. State Street serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
29
<PAGE>
Phoenix-Engemann Small Cap Fund
INVESTMENTS AT APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--94.6%
AIR FREIGHT--1.2%
Expeditors International of Washington,
Inc..................................... 90,000 $ 3,847,500
BIOTECHNOLOGY--3.1%
Aviron(b)............................... 65,000 1,564,062
Cor Therapeutics, Inc.(b)............... 51,000 3,885,562
Coulter Pharmaceutical, Inc.(b)......... 30,000 547,500
Gene Logic, Inc.(b)..................... 24,000 645,000
Pharmacyclics, Inc.(b).................. 30,000 1,361,250
Progenics Pharmaceuticals, Inc.(b)...... 45,000 2,070,000
------------
10,073,374
------------
BROADCASTING (TELEVISION, RADIO & CABLE)--0.3%
Spanish Broadcasting System, Inc. Class
A(b).................................... 45,000 840,937
COMMUNICATIONS EQUIPMENT--1.3%
Audiovox Corp. Class A(b)............... 45,600 1,564,650
Metawave Communications Corp.(b)........ 66,250 877,812
Ulticom, Inc.(b)........................ 52,000 1,716,000
------------
4,158,462
------------
COMPUTERS (SOFTWARE & SERVICES)--21.2%
Agile Software Corp.(b)................. 40,000 1,482,500
Aspsecure.com Corp.(b)(c)............... 180,000 585,000
BEA Systems, Inc.(b).................... 320,000 15,440,000
Bluestone Software, Inc.(b)............. 111,000 2,337,937
C-bridge Internet Solutions, Inc.(b).... 50,000 1,325,000
Commerce One, Inc.(b)................... 105,000 6,411,562
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--CONTINUED
E.piphany, Inc.(b)...................... 12,500 $ 825,781
Extensity, Inc.(b)...................... 70,500 863,625
HNC Software, Inc.(b)................... 20,000 990,000
Integrated Information Systems,
Inc.(b)................................. 79,000 538,187
Interwoven, Inc.(b)..................... 30,000 2,077,500
Keynote Systems, Inc.(b)................ 73,000 3,275,875
LivePerson, Inc.(b)..................... 208,000 1,300,000
Luminant Worldwide Corp.(b)............. 100,000 868,750
MatrixOne, Inc.(b)...................... 26,950 889,350
NYFIX, Inc.(b).......................... 170,000 4,579,375
New Era of Networks, Inc.(b)............ 50,000 1,568,750
PC-Tel, Inc.(b)......................... 26,000 871,000
Peregrine Systems, Inc.(b).............. 270,000 6,496,875
Predictive Systems, Inc.(b)............. 41,300 1,946,262
Prime Response, Inc.(b)................. 48,200 313,300
Primus Knowledge Solutions.............. 64,000 2,380,000
PurchasePro.com, Inc.(b)................ 50,500 1,515,000
Sapient Corp.(b)........................ 50,000 3,959,375
Selectica, Inc.(b)...................... 850 32,300
Silverstream Software, Inc.(b).......... 21,000 829,500
Software Technologies Corp.(b).......... 150,000 2,681,250
Versata, Inc.(b)........................ 31,950 970,481
Websense, Inc.(b)....................... 52,000 1,690,000
------------
69,044,535
------------
CONSUMER FINANCE--2.9%
Metris Companies, Inc................... 230,000 8,625,000
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
CONSUMER FINANCE--CONTINUED
NextCard, Inc.(b)....................... 71,000 $ 749,938
------------
9,374,938
------------
ELECTRICAL EQUIPMENT--6.5%
Advanced Energy Industries, Inc.(b)..... 160,000 11,040,000
Flextronics International Ltd.(b)....... 115,000 8,078,750
Viasystems Group, Inc.(b)............... 121,000 1,928,438
------------
21,047,188
------------
ELECTRONICS (INSTRUMENTATION)--3.5%
Aclara Biosciences, Inc.(b)............. 13,000 495,625
Caliper Technologies Corp.(b)........... 15,000 562,500
Meade Instruments Corp.(b).............. 85,000 6,215,625
Rudolph Technologies, Inc.(b)........... 140,000 4,252,500
------------
11,526,250
------------
ELECTRONICS (SEMICONDUCTORS)--20.4%
Anadigics, Inc.(b)...................... 63,500 4,778,375
Applied Micro Circuits Corp.(b)......... 150,000 19,331,250
Conexant Systems, Inc.(b)............... 90,000 5,388,750
Intersil Holding Corp.(b)............... 67,500 2,362,500
Micrel, Inc.(b)......................... 120,000 10,380,000
NETsilicon, Inc.(b)..................... 150,000 2,615,625
Quantam Effect Devices, Inc.(b)......... 27,100 1,578,575
Quicklogic Corp.(b)..................... 102,000 2,996,250
SDL, Inc.(b)............................ 30,000 5,850,000
Silcon Storage Technology, Inc.(b)...... 52,000 5,070,000
TriQuint Semiconductor, Inc.(b)......... 60,000 6,168,750
------------
66,520,075
------------
ENGINEERING & CONSTRUCTION--0.6%
SBA Communications Corp.(b)............. 48,000 1,950,000
EQUIPMENT (SEMICONDUCTORS)--2.7%
Cymer, Inc.(b).......................... 91,000 3,554,688
Mattson Technology, Inc.(b)............. 27,000 1,326,375
PRI Automation, Inc.(b)................. 50,000 3,993,750
------------
8,874,813
------------
FINANCIAL (DIVERSIFIED)--2.2%
Federal Agricultural Mortgage Corp.
Class C(b).............................. 176,000 2,640,000
Pinnacle Holdings, Inc. (b)............. 80,000 4,495,000
------------
7,135,000
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.4%
Emisphere Technologies, Inc.(b)......... 15,900 $ 652,645
Inhale Therapeutic Systems, Inc.(b)..... 40,000 2,475,000
Tanox, Inc.(b).......................... 39,000 1,140,750
ViroPharma, Inc.(b)..................... 9,000 136,125
------------
4,404,520
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.4%
MiniMed, Inc. (b)....................... 36,000 4,425,750
HEALTH CARE (SPECIALIZED SERVICES)--0.7%
Omnicare, Inc........................... 145,000 2,202,188
INVESTMENT MANAGEMENT--1.5%
Gabelli Asset Management, Inc. Class
A(b).................................... 241,500 4,799,813
RAILROADS--3.0%
Kansas City Southern Industries, Inc.... 135,000 9,703,125
RESTAURANTS--1.6%
Cheesecake Factory, Inc. (The)(b)....... 130,000 5,321,875
RETAIL (BUILDING SUPPLIES)--0.5%
Fastenal Co............................. 28,000 1,636,250
RETAIL (DISCOUNTERS)--1.8%
99 Cents Only Stores(b)................. 160,000 6,020,000
RETAIL (FOOD CHAINS)--2.0%
Smart & Final, Inc.(b).................. 303,832 2,411,667
Whole Foods Market, Inc.(b)............. 95,000 4,043,438
------------
6,455,105
------------
RETAIL (SPECIALTY)--3.7%
Cost Plus, Inc.(b)...................... 270,000 8,251,875
Williams-Sonoma, Inc.(b)................ 112,000 3,878,000
------------
12,129,875
------------
RETAIL (SPECIALTY-APPAREL)--1.0%
Children's Place Retail Stores, Inc.
(The)(b)................................ 148,000 3,293,000
SERVICES (ADVERTISING/MARKETING)--0.8%
MyPoints.com, Inc.(b)................... 20,000 350,000
Women.com Networks, Inc.(b)............. 455,930 2,279,650
------------
2,629,650
------------
SERVICES (COMMERCIAL & CONSUMER)--6.3%
Corporate Executive Board Co.
(The)(b)................................ 100,000 5,875,000
Diamond Technology Partners, Inc. (b)... 26,500 2,096,813
MIPS Technologies, Inc. Class A(b)...... 90,000 2,598,750
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)--CONTINUED
NCO Group, Inc.(b)...................... 92,000 $ 3,162,500
Pinnacle Oil International, Inc.(b)..... 127,000 3,683,000
Universal Access, Inc.(b)............... 66,300 1,359,150
Vicinity Corp.(b)....................... 57,500 682,813
i3 Mobile, Inc.(b)...................... 52,000 975,000
------------
20,433,026
------------
SERVICES (COMPUTER SYSTEMS)--0.7%
eMachines, Inc.(b)...................... 260,000 2,226,250
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.5%
Dobson Communications Corp. Class
A(b).................................... 69,000 1,768,125
TELECOMMUNICATIONS (LONG DISTANCE)--1.8%
Network Plus Corp.(b)................... 121,000 2,299,000
WinStar Communications, Inc.(b)......... 90,000 3,588,750
------------
5,887,750
------------
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $202,391,047) 307,729,374
- --------------------------------------------------------------------
FOREIGN COMMON STOCKS--3.9%
COMMUNICATIONS EQUIPMENT--0.8%
Research in Motion Ltd. (Canada)(b)..... 60,000 2,550,000
COMPUTERS (SOFTWARE & SERVICES)--0.2%
BreezeCom Ltd. (Israel)(b).............. 26,000 715,000
INSURANCE (LIFE/HEALTH)--1.3%
London Pacific Group Ltd. Sponsored ADR
(United Kingdom)(b)..................... 322,800 4,075,350
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)--1.6%
Encal Energy Ltd. (Canada)(b)........... 968,800 $ 5,230,890
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $7,716,734) 12,571,240
- --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--98.5%
(IDENTIFIED COST $210,107,781) 320,300,614
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ ------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.0%
COMMERCIAL PAPER--2.0%
Lexington Parker Capital Co.
LLC 6.06%, 5/1/00............. A-1+ $6,680 6,680,000
- ------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $6,680,000) 6,680,000
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--100.5%
(IDENTIFIED COST $216,787,781) 326,980,614(a)
Cash and receivables, less liabilities--(0.5%) (1,652,552)
------------
NET ASSETS--100.0% $325,328,062
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $137,116,626 and gross
depreciation of $28,069,841 for federal income tax purposes. At April 30,
2000, the aggregate cost of securities for federal income tax purposes was
$217,933,829.
(b) Non-income producing.
(c) Security valued at fair value as determined in good faith by or under the
direction of the Trustees.
8 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $216,787,781) $ 326,980,614
Cash 4,361
Receivables
Investment securities sold 1,981,641
Fund shares sold 384,871
Dividends 46,483
Prepaid expenses 3,171
--------------
Total assets 329,401,141
--------------
LIABILITIES
Payables
Investment securities purchased 2,772,658
Fund shares repurchased 702,439
Investment advisory fee 197,826
Distribution fee 151,148
Transfer agent fee 101,788
Financial agent fee 26,596
Trustees' fee 12,559
Accrued expenses 108,065
--------------
Total liabilities 4,073,079
--------------
NET ASSETS $ 325,328,062
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 146,218,135
Accumulated net realized gain 68,917,094
Net unrealized appreciation 110,192,833
--------------
NET ASSETS $ 325,328,062
==============
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $185,532,582) 6,324,215
Net asset value per share $29.34
Offering price per share $29.34/(1-5.75%) $31.13
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $139,795,480) 4,950,241
Net asset value and offering price per share $28.24
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 329,178
Dividends 118,311
--------------
Total investment income 447,489
--------------
EXPENSES
Investment advisory fee 2,089,096
Distribution fee, Class A 401,625
Distribution fee, Class B 1,178,959
Financial agent 242,575
Transfer agent 608,840
Printing 72,809
Custodian 29,754
Professional 28,617
Trustees 24,632
Registration 20,463
Miscellaneous 33,116
--------------
Total expenses 4,730,486
Custodian fees paid indirectly (3,597)
--------------
Net expenses 4,726,889
--------------
NET INVESTMENT LOSS (4,279,400)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 98,505,362
Net realized gain on foreign currency transactions 668
Net change in unrealized appreciation (depreciation) on
investments 75,397,017
--------------
NET GAIN ON INVESTMENTS 173,903,047
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 169,623,647
==============
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Engemann Small Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/00 4/30/99
------------- ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (4,279,400) $ (3,189,899)
Net realized gain (loss) 98,506,030 (24,983,780)
Net change in unrealized appreciation
(depreciation) 75,397,017 6,208,917
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 169,623,647 (21,964,762)
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (5,773,229)
Net realized gains, Class B -- (4,219,826)
------------- ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (9,993,055)
------------- ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(25,110,060 and 18,013,110 shares,
respectively) 524,113,700 273,064,204
Net asset value of shares issued from
reinvestment of distributions
(0 and 360,829 shares, respectively) -- 5,383,573
Cost of shares repurchased (26,495,134
and 22,385,155 shares, respectively) (561,376,449) (343,459,404)
------------- ------------
Total (37,262,749) (65,011,627)
------------- ------------
CLASS B
Proceeds from sales of shares
(1,120,897 and 987,925 shares,
respectively) 25,694,560 14,507,598
Net asset value of shares issued from
reinvestment of distributions
(0 and 243,730 shares, respectively) -- 3,536,528
Cost of shares repurchased (2,025,437
and 4,075,435 shares, respectively) (43,389,442) (61,757,518)
------------- ------------
Total (17,694,882) (43,713,392)
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (54,957,631) (108,725,019)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS 114,666,016 (140,682,836)
NET ASSETS
Beginning of period 210,662,046 351,344,882
------------- ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $ 325,328,062 $210,662,046
============= ============
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
----------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.74 $ 17.37 $ 14.13 $ 16.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.31) (0.14)(5) (0.08)(5) (0.05)(5) (0.04)(1)(5)
Net realized and unrealized gain (loss) 13.91 (0.88) 6.80 (2.53) 6.79
-------- -------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 13.60 (1.02) 6.72 (2.58) 6.75
-------- -------- -------- -------- -------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gains -- -- -- (0.01) --
-------- -------- -------- -------- -------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) (0.01)
-------- -------- -------- -------- -------
Change in net asset value 13.60 (1.63) 3.24 (2.61) 6.74
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 29.34 $ 15.74 $ 17.37 $ 14.13 $ 16.74
======== ======== ======== ======== =======
Total return(2) 86.40% (5.66)% 52.33 % (15.43)% 67.48 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $185,533 $121,313 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.38 %(6) 1.46 %(6) 1.31 % 1.37 % 1.50 %(3)
Net investment income (loss) (1.22)% (0.95)% (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 113 % 276% 498% 325% 103 %(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
--------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.26 $ 16.99 $ 13.98 $ 16.68 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.47) (0.25)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) 13.45 (0.87) 6.70 (2.50) 6.77
-------- ------- -------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 12.98 (1.12) 6.49 (2.67) 6.68
-------- ------- -------- ------- -------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net realized gains -- -- -- (0.01) --
-------- ------- -------- ------- -------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) --
-------- ------- -------- ------- -------
Change in net asset value 12.98 (1.73) 3.01 (2.70) 6.68
-------- ------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 28.24 $ 15.26 $ 16.99 $ 13.98 $ 16.68
======== ======= ======== ======= =======
Total return(2) 85.06% (6.39)% 51.16 % (16.03)% 66.80 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $139,795 $89,349 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.13 %(6) 2.21 %(6) 2.06 % 2.12 % 2.26 %(3)
Net investment income (loss) (1.97)% (1.70)% (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 113 % 276 % 498 % 325 % 103 %(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.02
and $0.02, respectively.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized
(4) Not annualized
(5) Computed using average shares outstanding.
(6) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
See Notes to Financial Statements 11
<PAGE>
<PAGE>
Phoenix-Seneca Strategic Theme Fund
INVESTMENTS AT APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--90.5%
BIOTECHNOLOGY--3.6%
MedImmune, Inc.(b)...................... 178,130 $ 28,489,667
BROADCASTING (TELEVISION, RADIO & CABLE)--6.2%
AMFM, Inc.(b)........................... 120,510 7,998,851
EchoStar Communications Corp.(b)........ 642,400 40,912,850
------------
48,911,701
------------
COMMUNICATIONS EQUIPMENT--6.8%
General Motors Corp. Class H(b)......... 233,500 22,488,969
Metricom, Inc.(b)....................... 157,670 4,424,614
Motorola, Inc........................... 218,960 26,069,925
------------
52,983,508
------------
COMPUTERS (HARDWARE)--10.5%
Alteon Websystems, Inc.(b).............. 188,220 12,798,960
Copper Mountain Networks, Inc.(b)....... 221,670 18,481,736
Extreme Networks, Inc.(b)............... 334,660 19,284,782
Sun Microsystems, Inc.(b)............... 346,010 31,811,294
------------
82,376,772
------------
COMPUTERS (SOFTWARE & SERVICES)--3.5%
Liberate Technologies, Inc.(b).......... 167,000 6,533,875
Mercury Interactive Corp.(b)............ 205,000 18,450,000
Vignette Corp.(b)....................... 53,730 2,589,114
------------
27,572,989
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--14.9%
Analog Devices, Inc.(b)................. 196,000 $ 15,055,250
Fairchild Semiconductor Corp. Class
A(b).................................... 760,900 36,142,750
Intel Corp.............................. 266,540 33,800,604
LSI Logic Corp.(b)...................... 500,770 31,298,125
------------
116,296,729
------------
EQUIPMENT (SEMICONDUCTORS)--15.4%
Applied Materials, Inc.(b).............. 356,650 36,311,428
KLA-Tencor Corp.(b)..................... 376,440 28,185,945
Lam Research Corp.(b)................... 450,000 20,643,750
Teradyne, Inc.(b)....................... 319,200 35,112,000
------------
120,253,123
------------
FINANCIAL (DIVERSIFIED)--2.6%
Citigroup, Inc.......................... 142,650 8,478,759
Morgan Stanley Dean Witter & Co......... 150,600 11,558,550
------------
20,037,309
------------
INSURANCE (PROPERTY-CASUALTY)--2.4%
MGIC Investment Corp.................... 399,240 19,088,663
MANUFACTURING (DIVERSIFIED)--4.4%
Corning, Inc............................ 173,890 34,343,275
OIL & GAS (DRILLING & EQUIPMENT)--14.1%
Grant Prideco, Inc...................... 387,970 7,468,423
Halliburton Co.......................... 627,800 27,740,913
Nabors Industries, Inc.(b).............. 775,750 30,593,641
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Phoenix-Seneca Strategic Theme Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)--CONTINUED
Rowan Companies, Inc.(b)................ 890,000 $ 24,864,375
Weatherford International, Inc.(b)...... 487,970 19,823,781
------------
110,491,133
------------
PAPER & FOREST PRODUCTS--0.6%
Smurfit-Stone Container Corp.(b)........ 329,350 5,022,588
SERVICES (COMMERCIAL & CONSUMER)--1.1%
Crown Castle International Corp.(b)..... 223,200 8,565,300
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--4.4%
Nextel Communications, Inc. Class
A(b).................................... 196,100 21,460,694
Nextel Partners, Inc. Class A(b)........ 41,100 901,631
Sprint Corp. (PCS Group)(b)............. 216,000 11,880,000
------------
34,242,325
------------
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $523,601,425) 708,675,082
- --------------------------------------------------------------------
FOREIGN COMMON STOCKS--8.7%
COMMUNICATIONS EQUIPMENT--8.7%
Nokia Oyj Sponsored ADR (Finland)....... 651,600 37,059,750
Nortel Networks Corp. (Canada).......... 274,630 31,101,847
------------
68,161,597
------------
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $45,784,932) 68,161,597
- --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--99.2%
(IDENTIFIED COST $569,386,357) 776,836,679
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--4.5%
COMMERCIAL PAPER--4.5%
Koch Industries, Inc. 6.04%,
5/1/00........................ A-1+ $16,710 $ 16,710,000
Marsh USA 6%, 5/8/00.......... A-1+ 4,245 4,240,047
Schering Corp. 6%, 5/11/00.... A-1+ 3,500 3,494,167
American Home Products Corp.
6.02%, 5/12/00................ A-1 4,765 4,756,235
Lexington Parker Capital Co.
LLC 6.08%, 5/15/00............ A-1 2,000 1,993,031
Special Purpose Accounts
Receivable Cooperative Corp.
6.05%, 5/17/00................ A-1 1,000 997,436
Associates Corporation of
North America 6.01%,
5/25/00....................... A-1 3,500 3,485,977
------------
35,676,893
------------
- -------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $35,676,767) 35,676,893
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--103.7%
(IDENTIFIED COST $605,063,124) 812,513,572(a)
Cash and receivables, less liabilities--(3.7%) (29,269,074)
------------
NET ASSETS--100.0% $783,244,498
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $258,734,158 and gross
depreciation of $53,908,947 for federal income tax purposes. At April 30,
2000, the aggregate cost of securities for federal income tax purposes was
$607,688,361.
(b) Non-income producing.
24 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $605,063,124) $ 812,513,572
Cash 2,396
Receivables
Fund shares sold 580,987
Dividends and interest 22,824
Prepaid expenses 6,573
--------------
Total assets 813,126,352
--------------
LIABILITIES
Payables
Investment securities purchased 27,766,813
Fund shares repurchased 1,010,400
Investment advisory fee 465,573
Distribution fee 251,502
Transfer agent fee 181,834
Financial agent fee 31,436
Trustees' fee 16,807
Accrued expenses 157,489
--------------
Total liabilities 29,881,854
--------------
NET ASSETS $ 783,244,498
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 514,706,221
Accumulated net realized gain 61,087,829
Net unrealized appreciation 207,450,448
--------------
NET ASSETS $ 783,244,498
==============
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $620,919,028) 27,449,595
Net asset value per share $22.62
Offering price per share $22.62/(1-5.75%) $24.00
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $157,169,172) 7,241,855
Net asset value per share and offering per share $21.70
CLASS C
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $5,156,298) 237,541
Net asset value per share and offering per share $21.71
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,003,622
Interest 684,800
Foreign taxes withheld (23,652)
--------------
Total investment income 1,664,770
--------------
EXPENSES
Investment advisory fee 2,319,786
Distribution fee, Class A 501,517
Distribution fee, Class B 1,066,872
Distribution fee, Class C 20,108
Financial agent fee 234,601
Transfer agent fee 486,982
Printing 50,111
Registration 37,381
Professional 31,613
Trustees 29,138
Custodian 20,115
Miscellaneous 9,051
--------------
Total expenses 4,807,275
Custodian fees paid indirectly (3,701)
--------------
Net expenses 4,803,574
--------------
NET INVESTMENT LOSS (3,138,804)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 95,521,350
Net change in unrealized appreciation (depreciation) on
investments (58,060,755)
--------------
NET GAIN ON INVESTMENTS 37,460,595
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 34,321,791
==============
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Phoenix-Seneca Strategic Theme Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/00 4/30/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (3,138,804) $ (1,592,337)
Net realized gain (loss) 95,521,350 18,354,872
Net change in unrealized appreciation
(depreciation) (58,060,755) 38,225,117
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 34,321,791 54,987,652
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (26,637,803) (6,923,924)
Net realized gains, Class B (20,732,140) (5,772,230)
Net realized gains, Class C (373,094) (28,108)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (47,743,037) (12,724,262)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(4,564,985 and 3,919,529 shares,
respectively) 93,227,507 64,808,215
Net asset value of shares issued from
Phoenix-Seneca Mid Cap Fund merger
(19,654,306 and 0 shares,
respectively) (See Note 6) 510,230,512 --
Net asset value of shares issued from
reinvestment of distributions
(1,381,459 and 419,976 shares,
respectively) 25,705,072 6,560,032
Cost of shares repurchased (4,070,380
and 4,982,395 shares, respectively) (83,306,119) (76,814,571)
------------ ------------
Total 545,856,972 (5,446,324)
------------ ------------
CLASS B
Proceeds from sales of shares (985,214
and 819,204 shares, respectively) 19,346,429 13,391,640
Net asset value of shares issued from
Phoenix-Seneca Mid Cap Fund merger
(1,280,671 and 0 shares,
respectively) (See Note 6) 31,929,692 --
Net asset value of shares issued from
reinvestment of distributions
(1,071,260 and 329,762 shares,
respectively) 19,241,688 5,028,874
Cost of shares repurchased (868,154
and 1,286,009 shares, respectively) (17,020,407) (18,585,029)
------------ ------------
Total 53,497,402 (164,515)
------------ ------------
CLASS C
Proceeds from sales of shares (196,187
and 36,724 shares, respectively) 4,015,847 589,799
Net asset value of shares issued from
reinvestment of distributions
(18,431 and 1,354 shares,
respectively) 332,457 20,648
Cost of shares repurchased (15,485 and
19,484 shares, respectively) (287,819) (266,095)
------------ ------------
Total 4,060,485 344,352
------------ ------------
CLASS M
Cost of shares repurchased (0 and
16,288 shares, respectively) -- (223,551)
------------ ------------
Total -- (223,551)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 603,414,859 (5,490,038)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 589,993,613 36,773,352
NET ASSETS
Beginning of period 193,250,885 156,477,533
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $783,244,498 $193,250,885
============ ============
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
--------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.22 $ 13.70 $ 12.03 $ 12.37 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.16) (0.11) (0.04) 0.06 0.00(1)
Net realized and unrealized gain (loss) 8.69 6.03 4.03 (0.38) 2.39
-------- -------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 8.53 5.92 3.99 (0.32) 2.39
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.01) --
Dividends from net realized gains (4.13) (1.40) (2.29) -- --
In excess of net investment income -- -- (0.03) -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.02)
-------- -------- ------- ------- -------
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.32) (0.02) (0.02)
-------- -------- ------- ------- -------
Change in net asset value 4.40 4.52 1.67 (0.34) 2.37
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 22.62 $ 18.22 $ 13.70 $ 12.03 $ 12.37
======== ======== ======= ======= =======
Total return(2) 53.26% 44.91% 36.22% (2.57)% 23.89%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $620,919 $107,871 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.29%(7) 1.38%(7) 1.33% 1.40% 1.40%(3)
Net investment income (loss) (0.77)% (0.72)% (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 157% 205% 618% 532% 175%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(7) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
See Notes to Financial Statements 27
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
-------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.75 $ 13.46 $ 11.91 $ 12.33 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.28) (0.22) (0.14) (0.03) (0.06)(1)
Net realized and unrealized gain (loss) 8.36 5.91 3.98 (0.38) 2.40
-------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 8.08 5.69 3.84(5) (0.41) 2.34
-------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (4.13) (1.40) (2.29) -- --
In excess of net investment income -- -- -- -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.01)
-------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.29) (0.01) (0.01)
-------- ------- ------- ------- -------
Change in net asset value 3.95 4.29 1.55 (0.42) 2.33
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 21.70 $ 17.75 $ 13.46 $ 11.91 $ 12.33
======== ======= ======= ======= =======
Total return(2) 52.03% 43.98% 35.18% (3.31)% 23.41%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $157,169 $84,698 $66,107 $49,843 $11,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.04%(7) 2.13%(7) 2.08% 2.15% 2.16%(3)
Net investment income (loss) (1.47)% (1.48)% (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover 157% 205% 618% 532% 175%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(7) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
28 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
------------------- 11/3/97 TO
2000 1999 4/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.47 $14.93
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss)(4) (0.29) (0.22) (0.05)
Net realized and unrealized gain (loss) 8.38 5.90 0.88
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 8.09 5.68 0.83
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains (4.13) (1.40) (2.29)
------ ------ ------
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.29)
------ ------ ------
Change in net asset value 3.96 4.28 (1.46)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $21.71 $17.75 $13.47
====== ====== ======
Total return(1) 52.09% 43.87% 7.92%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,156 $682 $267
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.04%(6) 2.13%(6) 2.08%(2)
Net investment income (loss) (1.53)% (1.47)% (0.87)%(2)
Portfolio turnover 157% 205% 618%(3)
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(6) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
See Notes to Financial Statements 29
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Equity Series Fund (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company.
Each Fund has distinct investment objectives. The Small Cap Fund seeks long-term
growth of capital by investing in a diversified portfolio of securities,
primarily common stock, of relatively small companies which the adviser believes
have long-term investment potential. The Growth Fund (formerly Equity
Opportunities) seeks to achieve long-term growth of capital from investment in a
diversified group of stocks or securities convertible into stocks. The Strategic
Theme Fund seeks long-term appreciation of capital through investing in
securities of companies that the adviser believes are particularly well
positioned to benefit from cultural, demographic, regulatory, social or
technological changes worldwide.
Each Fund offers both Class A and Class B shares. The Strategic Theme Fund
also offers Class C shares. Class M shares have been closed. Effective April 3,
2000, Class A shares are sold with a front-end sales charge of up to 5.75%.
Prior to that date, the maximum sales charge was 4.75% Class B shares are sold
with a contingent deferred sales charge which declines from 5% to zero depending
on the period of time the shares are held. Class C shares are sold with a 1%
contingent deferred sales charge if redeemed within one year of purchase. All
classes of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. Income and expenses of each Fund are borne pro rata by the
holders of all classes of shares, except that each class bears distribution
expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at their fair value as
determined in good faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust to comply with the requirements of the Internal Revenue Code
(the "Code") applicable to regulated investment companies, and to distribute all
of its taxable income to its shareholders. In addition, each Fund intends to
distribute an amount sufficient to avoid imposition of any excise tax under
Section 4982 of the Code. Therefore, no provision for federal income taxes or
excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
30
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 (CONTINUED)
G. OPTIONS:
The Trust may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
The Trust will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Trust may purchase options which are included in the Trust's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Phoenix Investment
Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("PHL"), is entitled to a fee based upon the
following annual rates as a percentage of the average daily net assets of each
Fund.
<TABLE>
<CAPTION>
1st $1 $1-2 $2+
Fund Billion Billion Billion
- ---- -------- -------- --------
<S> <C> <C> <C>
Small Cap Fund..................... 0.75% 0.70% 0.65%
Growth Fund........................ 0.70% 0.65% 0.60%
Strategic Theme Fund............... 0.75% 0.70% 0.65%
</TABLE>
Seneca Capital Management LLC ("Seneca") serves as subadviser to PIC for the
Growth Fund and Strategic Theme Fund. For its services, Seneca is paid a fee by
PIC ranging from 0.35% to 0.20% of the average daily net assets of the Equity
Opportunities Fund. A majority of the equity interests of Seneca are owned by
Phoenix Investment Partners Ltd. ("PXP"), an indirect majority-owned subsidiary
of PHL.
Roger Engemann & Associates, Inc. ("REA") serves as subadviser to PIC for the
Small Cap Fund. For its services, REA is paid a fee by the Adviser ranging from
0.375% to 0.20% of the average daily net assets of the Small Cap Fund. REA is a
wholly owned subsidiary of Pasadena Capital Corporation which in turn is a
wholly owned subsidiary of PXP.
As Distributor of the Trust's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect majority-owned subsidiary of PHL, has advised the Trust that it
retained net selling commissions of $71,696 for Class A shares and deferred
sales charges of $479,045 for Class B shares and $1,947 for Class C shares, for
the year ended April 30, 2000. In addition, each Series pays PEPCO a
distribution fee at an annual rate of 0.25% for Class A shares, 1.00% for
Class B shares, 1.00% for Class C shares and, prior to closing, 0.50% for
Class M shares applied to the average daily net assets of each Fund. The
Distribution Plan for Class A shares provides for fees to be paid up to a
maximum on an annual basis of 0.30%; the Distributor has voluntarily agreed to
limit the fee to 0.25%. The Distributor has advised the Trust that of the total
amount expensed for the year ended April 30, 2000, $2,074,317 was earned by the
Distributor, $1,505,192 was earned by unaffiliated participants and $177,556 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO receives a financial agent fee equal to
the sum of (1) the documented cost of fund accounting and related services
provided by PFPC, Inc. (subagent to PEPCO), plus (2) the documented cost to
PEPCO to provide financial reporting, tax services and oversight of subagent's
performance. The current fee schedule of PFPC, Inc. ranges from 0.085% to
0.0125% of the average daily net asset values of the Trust. Certain minimum fees
and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended April 30, 2000, transfer agent
fees were $1,359,659 of which PEPCO retained $558,243 which is net of the fees
paid to State Street.
At April 30, 2000, PHL and its affiliates held shares of the Trust as follows:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
-------- ---------
<S> <C> <C>
Growth Fund--Class A..................... 191 $ 1,870
Growth Fund--Class B..................... 29,391 272,455
</TABLE>
31
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term securities and
options) for the year ended April 30, 2000, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Small Cap Fund................... $308,147,162 $371,665,784
Growth Fund...................... 271,466,234 294,791,414
Strategic Theme Fund............. 524,816,230 483,186,391
</TABLE>
There were no purchases or sales of long-term U.S. Government securities.
4. CAPITAL LOSS CARRYOVERS
For the fiscal year ended April 30, 2000, the Small Cap Fund had losses of
$23,761,798 deferred in the prior year which were utilized in the current year.
5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of each of the Funds and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of April 30, 2000, the
Funds recorded the following reclassifications to increase (decrease) the
accounts listed below:
<TABLE>
<CAPTION>
Undistributed Accumulated
net investment net realized
income gain (loss)
-------------- ------------
<S> <C> <C> <C>
Small Cap Fund.......................... $4,279,400 $(4,279,400)
Growth Fund............................. 659,630 (659,630)
Strategic Theme Fund.................... 3,138,804 (3,138,804)
</TABLE>
6. OTHER
On March 10, 2000, the Phoenix-Seneca Strategic Theme Fund ("Strategic Theme")
acquired all of the net assets of the Phoenix-Seneca Mid Cap Fund ("Mid Cap")
pursuant to an Agreement and Plan of Reorganization approved by Mid Cap
shareholders on February 25, 2000. The acquisition was accomplished by a
tax-free exchange of 19,654,306 Class A shares of Strategic Theme and 1,280,671
Class B shares of Strategic Theme (valued at $510,230,512 and $31,929,692,
respectively) for 18,014,460 Class A shares of Mid Cap and 1,214,380 Class B
shares of Mid Cap outstanding on March 10, 2000. Mid Cap's net assets at that
date of $542,160,204, including $217,805,454 of unrealized appreciation or
depreciation were combined with those of Strategic Theme. The aggregate net
assets of Strategic Theme immediately after the merger were $902,270,416.
7. SUBSEQUENT EVENT
On May 12, 2000, the Phoenix-Seneca Equity Opportunities Fund (the "Acquiring
Fund") acquired the assets and liabilities of the Phoenix-Seneca Growth Fund
(the "Acquired Fund") pursuant to a plan of reorganization approved by its
shareholders on April 28, 2000. The acquisition was accomplished by a tax-free
exchange of shares of the Acquiring Fund in an amount equal to the outstanding
shares of the Acquired Fund. Effective May 12, 2000, the Acquiring Fund was
renamed the Phoenix-Seneca Growth Fund. For financial reporting purposes the
historical results of the Acquired Fund will survive.
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended April 30, 2000, the following funds distributed
long-term capital gains dividends.
<TABLE>
<S> <C>
Growth Fund.............. $ 8,258,969
Strategic Theme Fund..... 18,808,485
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix Strategic Equity Series Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge, the
Fund's record and other pertinent information.
32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix Strategic Equity Series Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Phoenix-Engemann Small Cap Fund,
Phoenix-Seneca Growth Fund (formerly Phoenix-Seneca Equity Opportunities Fund),
and Phoenix-Seneca Strategic Theme Fund (constituting separate series of the
Phoenix Strategic Equity Series Fund, hereinafter referred to as the "Trust") at
April 30, 2000, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended
and the financial highlights for each of the periods presented, in conformity
with accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at April 30, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
June 1, 2000
33
<PAGE>
Phoenix-Seneca Growth Fund
INVESTMENTS AT APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--85.6%
ALUMINUM--2.3%
Alcoa, Inc.............................. 38,770 $ 2,515,204
BANKS (MAJOR REGIONAL)--2.8%
Mellon Financial Corp................... 94,420 3,033,242
BEVERAGES (NON-ALCOHOLIC)--2.3%
Coca-Cola Co. (The)..................... 52,010 2,447,721
BROADCASTING (TELEVISION, RADIO & CABLE)--3.6%
AMFM, Inc.(b)........................... 58,890 3,908,824
CHEMICALS--2.0%
Dow Chemical Co. (The).................. 18,560 2,097,280
COMMUNICATIONS EQUIPMENT--7.7%
General Motors Corp. Class H(b)......... 41,030 3,951,702
Metricom, Inc.(b)....................... 12,490 350,501
Motorola, Inc........................... 32,830 3,908,822
------------
8,211,025
------------
COMPUTERS (HARDWARE)--3.0%
Sun Microsystems, Inc.(b)............... 34,850 3,204,022
COMPUTERS (NETWORKING)--3.0%
Cisco Systems, Inc.(b).................. 46,960 3,255,649
ELECTRICAL EQUIPMENT--4.3%
General Electric Co..................... 29,280 4,604,280
ELECTRONICS (SEMICONDUCTORS)--3.1%
Intel Corp.............................. 26,510 3,361,799
ENTERTAINMENT--2.1%
Walt Disney Co. (The)................... 51,060 2,211,536
EQUIPMENT (SEMICONDUCTORS)--4.1%
Applied Materials, Inc.(b).............. 38,140 3,883,129
KLA-Tencor Corp.(b)..................... 7,410 554,824
------------
4,437,953
------------
FINANCIAL (DIVERSIFIED)--8.1%
Citigroup, Inc.......................... 74,400 4,422,150
Morgan Stanley Dean Witter & Co......... 55,740 4,278,045
------------
8,700,195
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
HEALTH CARE (DIVERSIFIED)--2.5%
Johnson & Johnson....................... 32,620 $ 2,691,150
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--5.9%
Merck & Co., Inc........................ 56,240 3,908,680
Pfizer, Inc............................. 58,610 2,468,946
------------
6,377,626
------------
HEALTH CARE (HOSPITAL MANAGEMENT)--2.1%
Columbia/HCA Healthcare Corp............ 79,940 2,273,294
HOUSEHOLD PRODUCTS (NON-DURABLE)--2.2%
Clorox Co. (The)........................ 64,640 2,375,520
MANUFACTURING (DIVERSIFIED)--4.8%
Corning, Inc............................ 26,150 5,164,625
NATURAL GAS--1.9%
El Paso Energy Corp..................... 48,250 2,050,625
OIL & GAS (DRILLING & EQUIPMENT)--5.2%
Diamond Offshore Drilling, Inc.......... 26,240 1,057,800
Halliburton Co.......................... 101,090 4,466,914
------------
5,524,714
------------
PAPER & FOREST PRODUCTS--2.3%
Champion International Corp............. 37,140 2,441,955
RETAIL (BUILDING SUPPLIES)--3.7%
Lowe's Companies, Inc................... 79,690 3,944,655
RETAIL (GENERAL MERCHANDISE)--3.2%
Wal-Mart Stores, Inc.................... 61,600 3,411,100
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--3.4%
Nextel Communications, Inc. Class
A(b).................................... 32,920 3,602,682
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $77,236,089) 91,846,676
- --------------------------------------------------------------------
FOREIGN COMMON STOCKS--11.0%
COMMUNICATIONS EQUIPMENT--7.1%
Nokia Oyj Sponsored ADR (Finland)....... 69,160 3,933,475
Nortel Networks Corp. (Canada).......... 33,110 3,749,707
------------
7,683,182
------------
</TABLE>
See Notes to Financial Statements 3
<PAGE>
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--3.9%
STMicroelectronics N.V. (Netherlands)... 21,870 $ 4,148,466
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,519,377) 11,831,648
- --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--96.6%
(IDENTIFIED COST $82,755,466) 103,678,324
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000)
---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--11.9%
REPURCHASE AGREEMENT--11.9%
State Street Bank & Trust Co.
repurchase agreement, 4.25%,
dated 4/28/00 due 5/1/00,
repurchase price $12,730,507
collateralized by U.S.
Treasury Bond 9.875%,
11/15/15, market value
$12,987,319................... $12,726 12,726,000
- -------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $12,726,000) 12,726,000
- -------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--108.5%
(IDENTIFIED COST $95,481,466) 116,404,324(a)
Cash and receivables, less liabilities--(8.5%) (9,133,518)
------------
NET ASSETS--100.0% $107,270,806
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $24,508,036 and gross
depreciation of $3,756,973 for federal income tax purposes. At April 30,
2000, the aggregate cost of securities for federal income tax purposes was
$95,653,261.
(b) Non-income producing.
4 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investment securities at value, exclusive of repurchase
agreements
(Identified cost $82,755,466) $ 103,678,324
Repurchase agreements at value
(Identified cost $12,726,000) 12,726,000
Cash 559
Receivables
Investment securities sold 1,059,468
Fund shares sold 643,911
Dividends and interest 64,755
Deferred organization expenses 7,307
Prepaid expenses 935
--------------
Total assets 118,181,259
--------------
LIABILITIES
Payables
Investment securities purchased 10,683,387
Fund shares repurchased 22,792
Investment advisory fee 61,255
Distribution fee 25,615
Transfer agent fee 20,135
Financial agent fee 8,147
Trustees' fee 5,879
Accrued expenses 83,243
--------------
Total liabilities 10,910,453
--------------
NET ASSETS $ 107,270,806
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 81,518,890
Accumulated net realized gain 4,829,058
Net unrealized appreciation 20,922,858
--------------
NET ASSETS $ 107,270,806
==============
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $40,173,789) 1,800,489
Net asset value and offering price per share $22.31
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $46,726,923) 2,140,158
Net asset value per share $21.83
Offering price per share $21.83/(1-5.75%) $23.16
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,431,209) 488,882
Net asset value and offering price per share $21.34
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $9,938,885) 466,746
Net asset value and offering price per share $21.29
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Seven Months
Ended Year Ended
4/30/00 9/30/99
------------ -----------
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 445,820 $ 465,256
Interest 108,246 141,205
Foreign taxes withheld (2,670) --
----------- -----------
Total investment income 551,396 606,461
----------- -----------
EXPENSES
Investment advisory fee 378,813 443,317
Distribution fee, Class A 56,812 66,526
Distribution fee, Class B 44,439 24,197
Distribution fee, Class C 37,004 9,293
Financial agent fee 68,388 85,097
Transfer agent 52,724 88,614
Registration 26,735 53,567
Printing 26,064 40,695
Professional 13,890 23,412
Trustees 10,023 25,716
Custodian 7,066 12,443
Amortization of deferred organization expenses 6,220 10,658
Miscellaneous 15,311 23,541
----------- -----------
Total expenses 743,489 907,076
Less expenses borne by investment advisor -- (49,249)
----------- -----------
Net expenses 743,489 857,827
----------- -----------
NET INVESTMENT LOSS (192,093) (251,366)
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 7,460,846 7,420,446
Net change in unrealized appreciation (depreciation) on
investments 10,116,643 8,897,166
----------- -----------
NET GAIN ON INVESTMENTS 17,577,489 16,317,612
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $17,385,396 $16,066,246
=========== ===========
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Seven Months
Ended Year Ended Year Ended
4/30/00 9/30/99 9/30/98
------------ ----------- -----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (192,093) $ (251,366) $ (23,589)
Net realized gain (loss) 7,460,846 7,420,446 5,786,850
Net change in unrealized appreciation
(depreciation) 10,116,643 8,897,166 (3,716,413)
------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 17,385,396 16,066,246 2,046,848
------------ ----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class X -- -- (28,234)
Net realized gains, Class X (4,159,508) (2,678,808) (2,638,126)
Net realized gains, Class A (3,991,659) (2,257,410) (456,891)
Net realized gains, Class B (733,817) (125,950) --
Net realized gains, Class C (651,429) (32,675) --
------------ ----------- -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (9,536,413) (5,094,843) (3,123,251)
------------ ----------- -----------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (82,728,
191,178 and 285,390 shares,
respectively) 1,885,353 3,657,324 4,884,932
Net asset value of shares issued from
reinvestment of distributions
(189,191, 152,656 and 175,598
shares, respectively) 4,124,386 2,665,381 2,655,713
Cost of shares repurchased (262,967,
417,927 and 669,955 shares,
respectively) (5,710,606) (7,626,080) (11,501,669)
------------ ----------- -----------
Total 299,133 (1,303,375) (3,961,024)
------------ ----------- -----------
CLASS A
Proceeds from sales of shares
(835,146, 713,052 and 903,203
shares, respectively) 18,496,399 12,978,542 16,095,224
Net asset value of shares issued from
reinvestment of distributions
(183,997, 130,999 and 30,397 shares,
respectively) 3,928,347 2,250,565 454,436
Cost of shares repurchased (463,295,
329,410 and 233,349 shares,
respectively) (9,878,135) (5,879,689) (3,581,463)
------------ ----------- -----------
Total 12,546,611 9,349,418 12,968,197
------------ ----------- -----------
CLASS B
Proceeds from sales of shares
(268,528, 209,861 and 32,039 shares,
respectively) 5,843,443 3,860,313 544,661
Net asset value of shares issued from
reinvestment of distributions
(29,013, 5,386 and 0 shares,
respectively) 607,535 92,053 --
Cost of shares repurchased (36,556,
19,389 and 0 shares, respectively) (786,499) (368,688) --
------------ ----------- -----------
Total 5,664,479 3,583,678 544,661
------------ ----------- -----------
CLASS C
Proceeds from sales of shares
(365,168, 88,996 and 7,802 shares,
respectively) 7,875,964 1,633,483 139,674
Net asset value of shares issued from
reinvestment of distributions
(27,094, 1,890 and 0 shares,
respectively) 566,265 32,392 --
Cost of shares repurchased (20,738,
3,466 and 0 shares, respectively) (453,959) (65,089) --
------------ ----------- -----------
Total 7,988,270 1,600,786 139,674
------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 26,498,493 13,230,507 9,691,508
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS 34,347,476 24,201,910 8,615,105
NET ASSETS
Beginning of period 72,923,330 48,721,420 40,106,315
------------ ----------- -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0, $0 AND $0, RESPECTIVELY] $107,270,806 $72,923,330 $48,721,420
============ =========== ===========
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS X
---------------------------------------------------------------------
FROM
SEVEN MONTHS YEAR ENDED SEPTEMBER 30, INCEPTION
ENDED ------------------------------------ 3/8/96 TO
4/30/00 1999 1998 1997 9/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.92 $ 16.46 $ 16.43 $ 13.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01)(1) (0.04)(1) 0.00(1) 0.03 0.03
Net realized and unrealized gain (loss) 4.94 5.11 1.28 3.50 3.71
------- -------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 4.93 5.07 1.28 3.53 3.74
------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- (0.02) (0.07) --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
------- -------- -------- -------- -------
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.25) (0.84) --
------- -------- -------- -------- -------
Change in net asset value 2.39 3.46 0.03 2.69 3.74
------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 22.31 $ 19.92 $ 16.46 $ 16.43 $ 13.74
======= ======== ======== ======== =======
Total return 25.04%(4) 32.19% 8.48% 27.27% 37.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $40,174 $35,695 $30,713 $34,093 $12,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.06%(3) 1.16% 1.14% 1.52%(5) 0.81%(3)(5)
Net investment income (loss) (0.05)%(3) (0.20)% 0.02% 0.31% 0.76%(3)
Portfolio turnover 68%(4) 169% 166% 145.69% 87.66%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
FROM
SEVEN MONTHS YEAR ENDED SEPTEMBER 30, INCEPTION
ENDED ------------------------------------ 3/8/96 TO
4/30/00 1999 1998 1997 9/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.57 $ 16.23 $ 16.28 $ 13.63 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04)(1) (0.09)(1) (0.06)(1) (0.08) --
Net realized and unrealized gain 4.84 5.04 1.24 3.50 3.63
------- -------- -------- -------- ------
TOTAL FROM INVESTMENT OPERATIONS 4.80 4.95 1.18 3.42 3.63
------- -------- -------- -------- ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (2.54) (1.61) (1.23) (0.77) --
------- -------- -------- -------- ------
TOTAL DISTRIBUTIONS (2.54) (1.61) (1.23) (0.77) --
------- -------- -------- -------- ------
Change in net asset value 2.26 3.34 (0.05) 2.65 3.63
------- -------- -------- -------- ------
NET ASSET VALUE, END OF PERIOD $ 21.83 $ 19.57 $ 16.23 $ 16.28 $13.63
======= ======== ======== ======== ======
Total return(2) 24.81%(4) 31.89% 7.93% 26.51% 36.30%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $46,727 $31,001 $17,364 $6,013 $466
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.31%(3) 1.44% 1.55% 2.48%(6) 1.46%(3)(6)
Net investment income (loss) (0.29)%(3) (0.49)% (0.36)% (0.62)% 0.16%(3)
Portfolio turnover 68%(4) 169% 166% 145.69% 87.66%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the periods ended September 30, 1997 and 1996, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the periods ended September 30, 1997 and 1996, respectively.
See Notes to Financial Statements 7
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------
FROM
SEVEN MONTHS YEAR INCEPTION
ENDED ENDED 7/1/98 TO
4/30/00 9/30/99 9/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 19.28 $16.19 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.17) (0.31) (0.04)
Net realized and unrealized gain (loss) 4.77 5.01 (2.48)
------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.60 4.70 (2.52)
------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
------- ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) --
------- ------ ------
Change in net asset value 2.06 3.09 (2.52)
------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 21.34 $19.28 $16.19
======= ====== ======
Total return(2) 24.10%(4) 30.31% (13.47)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $10,431 $4,395 $519
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.42%(3) 2.60%(5) 2.60%(3)(5)
Net investment income (loss) (1.39)%(3) (1.66)% (1.12)%(3)
Portfolio turnover 68%(4) 169% 166%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------
FROM
SEVEN MONTHS YEAR INCEPTION
ENDED ENDED 7/1/98 TO
4/30/00 9/30/99 9/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $19.25 $16.18 $18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(1) (0.19) (0.32) (0.06)
Net realized and unrealized gain (loss) 4.77 5.00 (2.47)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.58 4.68 (2.53)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- --
Dividends from net realized gains (2.54) (1.61) --
------ ------ ------
TOTAL DISTRIBUTIONS (2.54) (1.61) --
------ ------ ------
Change in net asset value 2.04 3.07 (2.53)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $21.29 $19.25 $16.18
====== ====== ======
Total return(2) 24.09%(4) 30.20% (13.52)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,939 $1,833 $126
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.51%(3) 2.60%(6) 2.60%(3)(6)
Net investment income (loss) (1.48)%(3) (1.66)% (1.39)%(3)
Portfolio turnover 68%(4) 169% 166%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.46% and
12.48% for the periods ended September 30, 1999 and 1998, respectively.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 5.67% and
20.24% for the periods ended September 30, 1999 and 1998, respectively.
8 See Notes to Financial Statements
<PAGE>
PHOENIX-SENECA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Seneca Growth Fund (the "Fund") is a series of the Phoenix-Seneca
Funds (the "Trust") which is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund seeks to achieve
long-term capital appreciation. The Fund offers Class X (formerly Seneca
Institutional), Class A (formerly Seneca Administrative), Class B and Class C
shares. Class X shares are sold without a sales charge. Effective April 3, 2000,
Class A shares are sold with a front-end sales charge of up to 5.75%. Prior to
that date, the maximum sales charge was 4.75%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a 1% contingent
deferred sales charge if redeemed within one year of purchase. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that Class A, Class B and Class C shares bear
distribution expenses and have exclusive voting rights with respect to their
distribution plans. Investment income and realized and unrealized gains/losses
are allocated among the classes on the basis of net assets of each class.
Expenses that relate to the distribution of shares or services provided to a
particular class are allocated to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the mean between the most recent high bid and the most recent
low asked quotations. Short-term investments having a remaining maturity of 60
days or less are valued at amortized cost which approximates market. All other
securities and assets are valued at their fair value as determined in good faith
by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. In addition, the Fund
intends to distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Code. Therefore, no provision for federal income taxes
or excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, market
discount, organization costs, expiring capital loss carryforwards, foreign
currency gain/loss, partnerships, operating losses and losses deferred due to
wash sales and excise tax regulations. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Fund does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. FORWARD CURRENCY CONTRACTS:
The Fund may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge the
U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded
9
<PAGE>
PHOENIX-SENECA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 (CONTINUED)
directly between currency traders and their customers. The contract is
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain (or loss). When the contract is closed or offset with the
same counterparty, the Fund records a realized gain (or loss) equal to the
change in the value of the contract when it was opened and the value at the time
it was closed or offset.
G. OPTIONS:
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. Gains and losses on written
options are reported separately in the Statement of Operations. When a written
option is exercised, the proceeds on sales or amounts paid are adjusted by the
amount of premium received. Options written are reported as a liability in the
Statement of Assets and Liabilities and subsequently marked-to-market to reflect
the current value of the option. The risk associated with written options is
that the change in value of options contracts may not correspond to the change
in value of the hedged instruments. In addition, losses may arise from changes
in the value of the underlying instruments, or if a liquid secondary market does
not exist for the contracts.
The Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
H. ORGANIZATION EXPENSE:
In 1996, the Fund incurred organizational expenses which are amortized on a
straight line basis over a period of sixty months from the commencement of
operations. If any of the initial shares are redeemed before the end of the
amortization period, the proceeds of the redemption will be reduced by the pro
rata share of unamortized organization expenses.
I. EXPENSES:
Trust expenses not directly attributable to a specific Fund are allocated
evenly among all funds. Fund expenses that are not related to the distribution
of shares of a particular class or to services provided specifically to a
particular class are allocated among the classes on the basis of relative
average daily net assets of each class.
J. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where the Fund acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. The Fund, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund in the event of default
by the seller. If the seller defaults and the value of the collateral declines,
or if the seller enters insolvency proceedings, realization of collateral may be
delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix Investment Counsel, Inc, ("PIC" or the "Adviser") serves as investment
adviser to the Fund and Seneca Capital Management LLC ("Seneca" or the
"Subadviser") serves as investment subadviser. All of the outstanding stock of
PIC and a majority of the equity interests of Seneca are owned by Phoenix
Investment Partners Ltd. ("PXP"), an indirect, majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"). As compensation for services
to the Fund, the adviser is entitled to a fee at an annual rate of 0.70% of the
average daily net assets of the Fund. The Adviser pays the Subadviser a fee
equal to one half of the Adviser fee.
Phoenix Equity Planning Corporation ("PEPCO"), a direct subsidiary of PXP,
serves as Administrator of the Fund. PEPCO receives a financial agent fee equal
to the sum of (1) the documented cost of fund accounting and related services
provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO
to provide financial reporting, tax services and oversight of the subagent's
performance. The current fee schedule of PFPC Inc. ranges from 0.085% to 0.0125%
of the average daily net asset values of the Fund. Certain minimum fees and fee
waivers may apply.
The Adviser voluntarily agreed to waive or reimburse the Fund's operating
expenses until January 31, 2001, to the extent that such expenses exceed the
following percentages of average annual net assets: 1.25% for Class X, 1.85% for
Class A and 2.60% for Classes B and C.
PEPCO serves as the national distributor of the Fund's shares and has advised
the Fund that it retained net selling commissions of $18,628 for Class A shares
for the seven months ended April 30, 2000. Deferred sales charges retained by
PEPCO for the seven months ended April 30, 2000 were $12,175 for Class B shares
and $262 for Class C shares. In addition, the Fund pays PEPCO a distribution fee
at an annual rate of 0.25% for Class A shares and 1.00% for Class B and C shares
applied to the average daily net assets of the Fund. The distributor has advised
the Fund that of the total amount expensed for the seven months ended April 30,
2000,
10
<PAGE>
PHOENIX-SENECA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 (CONTINUED)
$100,932 was retained by the Distributor, $36,051 was paid out to unaffiliated
Participants and $1,272 was paid to W.S. Griffith, an indirect subsidiary of
PHL.
PEPCO serves as the Funds Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the seven months ended April 30, 2000,
transfer agent fees were $52,724 of which PEPCO retained $1,153 which is net of
fees paid to State Street.
At April 30, 2000, PHL and affiliates held 929 Class B shares and 6,652 Class
C shares of the Fund with a combined value of $161,445.
3. PURCHASE AND SALE OF SECURITIES
During the seven months ended April 30, 2000, purchases and sales of
investments, excluding short-term securities and U.S. Government and agency
securities, amounted to $76,742,174 and $60,256,023, respectively. There were no
purchases and sales of long-term U.S. Government and agency securities during
the period.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as the Fund's ability to
repatriate such amounts.
5. OTHER
As of April 30, 2000, the Fund had 1 shareholder who individually owned 10.2%
of total net assets, who is not affiliated with PHL or PXP. In addition,
affiliate holdings are presented within Note 2.
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to present
undistributed income and realized gains on a tax basis which is considered to be
more informative to the shareholder. As of April 30, 2000, the Fund increased
undistributed net investment income by $192,093, decreased accumulated net
realized gain by $192,427, and increased capital paid in on shares of beneficial
interest by $334.
7. SUBSEQUENT EVENT
On May 12, 2000, the Phoenix-Seneca Equity Opportunities Fund (the "Acquiring
Fund") acquired the assets and liabilities of the Phoenix-Seneca Growth Fund
(the "Acquired Fund") pursuant to a plan of reorganization approved by its
shareholders on April 28, 2000. The acquisition was accomplished by a tax-free
exchange of shares of the Acquiring Fund in an amount equal to the outstanding
shares of the Acquired Fund. Effective May 12, 2000, the Acquiring Fund was
renamed the Phoenix-Seneca Growth Fund. For financial reporting purposes the
historical results of the Acquired Fund will survive.
TAX INFORMATION NOTICE (UNAUDITED)
For the seven months ended April 30, 2000, the Fund distributed long-term
capital gain dividends of $2,908,271.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective Prospectus which includes information
concerning the sales charge, the Fund's record and other pertinent information.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix-Seneca Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Phoenix-Seneca Growth Fund (the
"Fund") at April 30, 2000, the results of its operations and the changes in its
net assets for the periods presented and the financial highlights for the period
ended April 30, 2000 and each of the two years in the period ended
September 30, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 2000, by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The financial statements of the Fund, formerly a
portfolio in the Seneca Funds, for the periods ended September 30, 1997 were
audited by other independent accountants whose report dated November 5, 1997
expressed an unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
June 1, 2000
12
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS
a.* Agreement and Declaration of Trust of the Registrant, dated
June 23, 2000, filed via Edgar herewith.
b.* Bylaws of the Registrant filed via Edgar herewith.
c. Reference is made to Registrant's Agreement and Declaration
of Trust. See Exhibit a.
d.1 Management Agreement between Registrant and National
Securities & Research Corporation dated January 1, 1994, as
assigned to Phoenix Investment Counsel Inc. effective June 1,
1998, filed via EDGAR as Exhibit 5.1 with Post-Effective
Amendment No. 25 on August 20, 1997, incorporated herein by
reference.
d.2 Investment Advisory between Registrant and Phoenix Investment
Counsel, Inc. dated October 16, 1995, filed via EDGAR
as Exhibit 5.2 with Post-Effective Amendment No. 13 on
October 16, 1995, incorporated herein by reference.
d.3 First Amendment to Phoenix Strategic Equity Series Fund
Management Agreement between Registrant and National
Securities Research Corporation dated January 1, 1994, as
assigned to Phoenix Investment Counsel, Inc. with Post-
Effective Amendment No. 25 on August 20, 1997, incorporated
herein by reference.
d.4 Second Amendment to Phoenix Strategic Equity Series Fund
Management Agreement between Registrant and National
Securities and Research Corporation dated October 16, 1995,
as assigned to Phoenix Investment Counsel, Inc. effective
June 1, 1998, filed via EDGAR as Exhibit 5.4 with Post-
Effective Amendment No. 25 on August 20, 1997, incorporated
herein by reference.
d.5 Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Seneca Capital Management LLC, dated June 26,
1998, on behalf of Growth Fund filed via EDGAR as Exhibit
5.5 with Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
d.6 Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Roger Engemann & Associates, Inc., dated June
26, 1998, on behalf of Small Cap Fund filed via EDGAR as
Exhibit 5.6 with Post-Effective Amendment No. 29 on August
28, 1998, incorporated herein by reference.
d.7 Subadvisory Agreement between Phoenix Investment Counsel,
Inc. and Seneca Capital Management LLC dated August 6,
1999, on behalf of Strategic Theme Fund filed via EDGAR with
Post-Effective Amendment No. 39 on May 11, 2000, incorporated
herein by reference.
e.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation ("Equity Planning") dated November 19,
1997, filed via EDGAR as Exhibit 6.1 with Post-Effective
Amendment No. 28 on February 13, 1998, and incorporated
herein by reference.
e.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers filed via EDGAR as Exhibit 6.2 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed via EDGAR as Exhibit 6.3 with Post-Effective Amendment
No. 29 on August 28, 1998, incorporated herein by reference.
e.4 Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed via EDGAR as Exhibit 6.4 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
f. None.
g. Custodian Contract between Registrant and State Street Bank
and Trust Company dated May 1, 1997, filed via EDGAR as
Exhibit 8 with Post-Effective Amendment No. 27 on October 27,
1997, incorporated herein by reference.
h.1 Transfer Agency and Service Agreement between Registrant and
Equity Planning dated June 1, 1994, filed via EDGAR as
Exhibit 9.1 with Post-Effective Amendment No. 25 on August
20, 1997, incorporated herein by reference.
h.2 Sub-Transfer Agency Agreement between Registrant and Phoenix
Equity Planning Corporation dated June 1, 1994, filed via
EDGAR as Exhibit 9.2 with Post-Effective Amendment No. 29 on
August 28, 1998, incorporated herein by reference.
C-1
<PAGE>
h.3 Amended and Restated Financial Agent Agreement between
Registrant and Equity Planning dated November 19, 1997 filed
via EDGAR as Exhibit 9.3 with Post-Effective Amendment No. 28
on February 13, 1998, incorporated herein by reference.
h.4 First Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated
March 23, 1998, filed via EDGAR as Exhibit 9.4 with
Post-Effective Amendment No. 29 on August 28, 1998,
incorporated herein by reference.
h.5 Second Amendment to Financial Agent Agreement between
Registrant and Phoenix Equity Planning Corporation dated July
31, 1998, filed via EDGAR as Exhibit 9.5 with Post-Effective
Amendment No. 29 on August 28, 1998, incorporated herein by
reference.
i.* Opinion as to legality of the shares
filed via EDGAR herewith.
j.* Consent of Independent Accountants
filed via EDGAR herewith.
k. Not applicable.
l. None.
m.1 Amended and Restated Distribution Plan for Class A Shares
filed via EDGAR as Exhibit 15.1 with Post-Effective Amendment
No. 27 on October 27, 1997, incorporated herein by reference.
m.2* Distribution Plan for Class B Shares
filed via EDGAR herewith.
m.3* Distribution Plan for Class C Shares
filed via EDGAR herewith.
n. Financial Data Schedules.
o.1 Amended and Restated Rule 18f-3 Multi-Class Distribution Plan
effective May 1, 1999 filed via EDGAR with Post-Effective
Amendment No. 39 on May 11, 2000, incorporated herein by
reference.
o.2 First Amendment to Amended and Restated Plan Pursuant to Rule
18f-3, effective February 25, 2000, filed via EDGAR with
Post-Effective Amendment No. 39 on May 11, 2000, incorporated
herein by reference.
p.* Code of Ethics of the Trust, its Adviser, Subadvisers and
Distributor filed via EDGAR herewith.
q.1 Power of Attorney for Herbert Roth, Jr., filed via EDGAR as
Exhibit p. with Post-Effective Amendment No. 30 on June 28,
1999 and herein incorporated by reference.
q.2 Powers of Attorney for all other Trustees filed via EDGAR
with Post-Effective Amendment No. 40 on June 7, 2000 and
incorporated herein by reference.
------------------
*Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
No person is controlled by, or under common control, with the Fund.
ITEM 25. INDEMNIFICATION
The Agreement and Declaration of Trust dated June 23, 2000 and the By-Laws of
the Registrant provide that no trustee or officer will be indemnified against
any liability to which the Registrant would otherwise be subject by reason of or
for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties. The Management Agreement, Underwriting Agreement, Custody
Agreement and Transfer Agency Agreement each provides that the Trust will
indemnify the other party (or parties, as the case may be) to the agreement for
certain losses.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Services of the Advisers"
and "Management of the Trust" in the Statement of Additional Information, each
of which is included in this Post-Effective Amendment to the Registration
Statement. For information as to the business, profession, vocation or
employment of a substantial nature of director and officers of the Advisers
C-2
<PAGE>
reference is made to the Adviser's current Form ADV (SEC File No. 801-5995)
filed under the Investment Advisers Act of 1940 and incorporated herein by
reference.
ITEM 27. PRINCIPAL UNDERWRITER
(a) Equity Planning also serves as the principal underwriter for the
following other investment companies:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities
Fund, Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann
Funds, Phoenix Equity Series Fund, Phoenix-Euclid Funds, Phoenix-Goodwin
California Tax Exempt Bond Fund, Phoenix-Goodwin Multi-Sector Fixed
Income Fund, Inc., Phoenix-Goodwin Multi-Sector Short Term Bond Fund,
Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund,
Phoenix-Oakhurst Income & Growth Fund, Phoenix-Oakhurst Strategic
Allocation Fund, Inc., Phoenix-Seneca Funds, Phoenix Series Fund,
Phoenix-Zweig Trust, Phoenix Home Life Variable Universal Life Account,
Phoenix Home Life Variable Accumulation Account, PHL Variable
Accumulation Account, Phoenix Life and Annuity Variable Universal Life
Account and PHL Variable Separate Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<S> <C> <C>
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES
PRINCIPAL ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
----------------- --------------------- ----------------------
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and Chairman Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Executive Vice President, Vice President
100 Bright Meadow Blvd. Chief Financial Officer and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry President, Executive Vice President
56 Prospect St. Retail Division
P.O. Box 150480
Hartford, CT 06115-0480
Barry Mandinach Executive Vice President, None
900 Third Avenue Chief Marketing Officer,
New York, NY 10022 Retail Division
Robert Tousingnant Executive Vice President, None
56 Prospect St. Chief Sales Officers,
P.O. Box 150480 Retail Division
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Secretary
101 Munson St. Mutual Fund
P.O. Box 810 Customer Service
Greenfield, MA 01302-0810
Robert S. Dreissen Vice President, Compliance Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline Porter Assistant Vice President Assistant Treasurer
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-3
<PAGE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during
the Registrant's last fiscal year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder include
herein described Funds' investment adviser, Phoenix Investment Counsel, Inc.;
Registrant's financial agent, transfer agent and principal underwriter, Phoenix
Equity Planning Corporation; Registrant's dividend disbursing agent and
custodian, State Street Bank and Trust Company. The address of the Secretary of
the Trust is 101 Munson Street, Greenfield, Massachusetts 01301; the address of
Phoenix Investment Counsel, Inc. is 56 Prospect Street, Hartford, Connecticut
06115; the address of Phoenix Equity Planning Corporation is 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200; the address of the
dividend disbursing agent is P.O. Box 8301, Boston, Massachusetts 02266-8301,
Attention: Phoenix Funds, and the address of the custodian is P.O. Box 351,
Boston, Massachusetts 02101.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Fund certifies that it meets all of the requirements for effectiveness
of this amendment to the registration statement under rule 485(b) under the
Securities Act and has duly caused this amendment to the registration statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Hartford, and State of Connecticut on the 28th day of August, 2000.
PHOENIX STRATEGIC EQUITY SERIES FUND
ATTEST: /s/ Pamela S. Sinofsky By: /s/ Philip R. McLoughlin
---------------------- ------------------------
Pamela S. Sinofsky Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated, on this 28th day of August, 2000.
<TABLE>
<S> <C>
SIGNATURE TITLE
--------- -----
Trustee
---------------------------------------
Robert Chesek*
Trustee
---------------------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (principal
--------------------------------------- financial and accounting officer)
Nancy G. Curtiss
Trustee
---------------------------------------
Harry Dalzell-Payne*
Trustee
---------------------------------------
Francis E. Jeffries*
Trustee
---------------------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin Trustee and President
--------------------------------------- (principal executive officer)
Philip R. McLoughlin
Trustee
---------------------------------------
Everett L. Morris*
Trustee
---------------------------------------
James M. Oates*
Trustee
---------------------------------------
Herbert Roth, Jr.*
Trustee
---------------------------------------
Richard E. Segerson*
Trustee
---------------------------------------
Lowell P. Weicker, Jr.*
</TABLE>
*By /s/ Philip R. McLoughlin
------------------------
* Philip R. McLoughlin pursuant to powers of attorney.
